Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — SCOTLAND

Fishing Industry (Fuel Prices)

Mr. Ancram: asked the Secretary of State for Scotland what assessment he has made of the impact of increased fuel prices on the fishing industry; and if he will make a statement.

The Minister of State, Scottish Office (Mr. Bruce Milian): There is great variation in the impact of increased oil prices and the industry itself is best placed to provide the Government with a comprehensive assessment.

Mr. Ancram: I thank the hon. Gentleman for that answer. Is he aware that the increased costs are causing great destruction within the industry, that it is one of the few industries that cannot pass on its costs, and that in many cases in the smaller boats around areas like Berwick and East Lothian it is causing a loss of between £3 and £4 a week for the crew members in pay? Does he intend to do anything about it?

Mr. Milian: As I said, it is basically for the industry to make out its case. I understand that the various associations have been meeting. No doubt they will be making representations to us in due course. I am not sure that I wholly accept what the hon. Gentleman said about not being able to pass on increases in costs. If he or any other hon. Member has information on this matter, naturally I should be glad to consider it.

Economic Council

Mr. Teddy Taylor: asked the Secretary of State for Scotland if he will make

a statement on the work of the Scottish Economic Planning Council.

The Secretary of State for Scotland (Mr. William Ross): Appointments to the council expired on 28th February, and I am at present considering the question of new membership.

Mr. Taylor: Is the Secretary of State aware of the real concern in Scotland and on this side of the House about the effect of the Budget on jobs and prosperity in Scotland, particularly on the viability of Scottish industry? When the new council is appointed will the right hon. Gentleman make its first task to consider whether the Budget will create more unemployment in Scotland?

Mr. Ross: The Budget, to get it into perspective, was necessitated by the condition of the economy that we inherited. The hon. Gentleman did not vote against anything in the Budget.
The council has been renamed the Scottish Economic Council. The hon. Gentleman slipped up on that one, too. The Scottish Economic Planning Council was allowed to lapse. I do not know whether the previous administration intended to carry it on again. If so, they should have taken action long before. I take note of the indication of priority laid down by the hon. Gentleman.

Mr. Younger: Will the Secretary of State ask the council at its first meeting to produce a study for publication of the number of jobs in Scotland which are likely to be lost due to the ill-considered actions by the Government in cutting off export orders for certain countries which are extremely valuable to Scotland, and to Clydeside in particular?

Mr. Ross: The council does not exist at the moment. The hon. Gentleman must appreciate that this is due to the failure of the previous Government to take timely action. I shall reconstitute it and review the nature of its work

Mr. MacArthur: When the right hon. Gentleman reviews the nature of the council's work will he require a study in depth and publish its findings, showing the impact on the Scottish economy of the recent Budget, the cost to Scottish industry of the steep increase in taxation on businesses and the extra cost to individuals in Scotland who will have to pay £1·56


per household more than before as a direct consequence of the Government's Budget proposals?

Mr. Ross: Judging by the misleading information that the hon. Gentleman has and the impression that he is giving about the effect of the Budget on Scotland, it is necessary for somebody to make a study of these matters, because I do not accept his figures

Fresh-Water Fishing

Mr. Dalyell: asked the Secretary of State for Scotland if he has yet completed his consideration of the recommendations of the Hunter Committee's report on fresh-water fishing; and if he will make a statement

Mr. William Ross: I have nothing to add to my reply of 20th March.—[Vol. 870, c. 1006.]

Mr. Dalyell: In the interim can something be done about the stocking of poor waters for the public benefit?

Mr. Ross: I think that my hon. Friend raised this matter a few weeks ago at Question Time and I said then that we would consider it

Mr. Beith: Will the right hon. Gentleman bear in mind that the Hunter Report contains proposals which would have damaging effects on commercial salmon fishing on the English side of the border, in Northumberland, and that the shelf is the best place for them?

Mr. Ross: The Hunter Report contains many complex proposals, some of which have been overtaken by time—because it is nearly 10 years since the Committee made an interim report

A9

Mr. Gray: asked the Secretary of State for Scotland what time scale he envisages for the A9 improvements, north of Inverness; and if he will make a statement

Mr. Millan: Two road contracts have been let, but the completion of the new route across the Black Isle will be determined largely by the building of the Kessock Bridge, which I expect will take about three years. Design work is progressing well and my right hon. Friend hopes to invite tenders later this year.

Improvements further north will be undertaken as fast as resources allow

Mr. Gray: That is a satisfactory answer. I am sure that the hon. Gentleman will agree that it highlights the importance given by the previous Government to contracts and planning in oil-related areas in this region. However, will he undertake that there will be no reduction in the type of structure or road construction which was planned by the previous Government?

Mr. Millan: I do not think that that point has been considered. The complaints were, and probably still are, that the construction was not adequate

Mr. Russell Johnston: Will the Minister reconsider the question of making this road a dual carriageway throughout its length? Is he aware that I was extremely sorry to receive a letter from the Minister of State in another place indicating that while he was committed to it before the election he has now changed his mind? Will the hon. Gentleman change his mind back again?

Mr. Millan: I do not think the hon. Member received a letter from me. I do not remember having any views about the A9 before the election. However, my present view is that it is an extremely expensive scheme. The estimated cost was £60 million, but the actual cost will be considerably greater than that. It is in the light of that—and I hope later to be able to give the House more accurate information—that the matter must be considered

Mr. Buchanan-Smith: Does the Minister not realise that the development of this road is fundamental to the development and support of oil generally in that part of Scotland? Will the Minister confirm or deny reports in the Press this week from Inverness County Council that the Government are contemplating cuts in the programme? The previous Government certainly intended to go ahead with it

Mr. Millan: I am not aware of those reports. I am, however, aware that the road is important for North Sea oil developments, but the expense which the previous Government undertook to meet is likely to be a serious underestimate.

Fishing Boats (Grants)

Mr. Donald Stewart: asked the Secretary of State for Scotland what is his policy towards grants for building new fishing boats; and if he will make a statement

Mr. Millan: I would refer the hon. Gentleman to the reply given to the right hon. Member for Orkney and Shetland (Mr. Grimond) on 3rd April.—[Vol. 871, c. 380.]

Mr. Stewart: Higher grants are still available to fishermen in Northern Ireland. Will the Minister therefore, without prejudice to any concessions to the Northern Ireland fishermen, take action to end the moratorium on grants for Scottish fishermen, increasing the grants if possible?

Mr. Milian: I cannot say when it will be possible to lift the moratorium which was imposed by the previous Government. The applications already approved are likely to use all the funds in the Estimates submitted to the House.

Mr. Grimond: In the reply to which the Minister referred, in which I was involved, it was said that it was extremely important to keep the fleet modern. That is right, and I trust that the grants will be reintroduced. Will the Minister of State also make a statement about the principles upon which applications for grants are referred to Brussels under the FEOGA scheme?

Mr. Millan: Nothing in the grant scheme so far would be affected by Common Market regulations, but I suppose that any question of assistance to industry is a matter on which the Commission might take a view.

Roads (Stock-proof Fences)

Mr. MacCormick: asked the Secretary of State for Scotland if he will ensure that where new roads are built they are fenced with stock-proof fences.

Mr. Millan: Highway authorities are under no obligation to fence against livestock on land adjoining the highway, but roadside fences are generally provided on motorways—from which animals are excluded—to replace previously existing fences where improvements are

being carried out and at special places such as bridge parapets and on top of embankments

Mr. MacCormick: Under current conditions, when the road is improved the traffic will be moving much faster. In those circumstances cannot a fresh look be taken at the whole question?

Mr. Millan: That is a fair point. We must remember that if we fenced every road it would be an expensive proposition. However, we are asking for information from county councils about the extent to which they have unfenced roads in their areas and we shall consider the problem in the light of that information

Mr. Gray: Will the Minister pay particular attention to the rights of crofters when a new road is being constructed where no road existed before? Will he bear in mind the reasonable demands of the crofters that the fencing should be taken care of when the road is built?

Mr. Milian: I shall bear that in mind. There is nothing to prevent highway authorities providing fencing, but also there is no obligation upon them to do so.

Council of Ministers

Mr. Douglas Henderson: asked the Secretary of State for Scotland how many times since United Kingdom entry to the EEC the Scottish Office has been represented at ministerial level at meetings of the Council of Ministers

Mr. William Ross: So far as I am aware, at one meeting during the previous administration

Mr. Henderson: I thank the Secretary of State for that reply, which will cause great concern in Scotland. Will the right hon. Gentleman consider breaking with the bad habits of his predecessor and stand up for Scotland by insisting that he is represented at all future meetings of the Council of Ministers?

Mr. Ross: I do not believe that is necessary. Co-ordination within the Government takes place interdepartmentally, and a Minister goes to the meetings not to represent any one Department or any one point of view. That is the correct way to do it. Scottish Office Ministers will


attend as and when we consider it essential.

Mr. Sproat: Will the right hon. Gentleman continue to resist such parochial tendencies as are expressed by the hon. Member for Aberdeenshire, East (Mr. Henderson)? Will he confirm that my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) represented not only Scottish interests in Europe but, on occasions, solely United Kingdom interests, as did my right hon. Friend the Member for Kinross and West Perthshire (Sir A. Douglas-Home)?

Mr. Ross: That is quite correct, and that is the proper and sensible attitude to adopt. I hope that the new-come members of the Scottish National Party will drop their parochial approach to this matter

Mr. Buchanan-Smith: Will the right hon. Gentleman take another look at the number of times that a Scottish Office Minister has represented not only Scotland but the United Kingdom in these negotiations? If my memory serves me correctly, I am sure it happened more than once. Will the right hon. Gentleman also confirm what was said by my hon. Friend the Member for Aberdeen, South (Mr. Sproat), that the Scottish Office and we in Scotland will give all support to Scottish Office Ministers representing United Kingdom interests in Europe, as has happened in the past?

Mr. Ross: The answer to the first part is. "Yes", and to the second part, "Yes"

Tourist Industry

Sir John Gilmour: asked the Secretary of State for Scotland what effect the Budget will have on the prosperity and growth of the Scottish tourist industry; and if he will make a statement.

Mr. Millan: The Budget contained no measures relating specifically to tourism. I am confident that the Scottish tourist industry will continue to flourish.

Sir J. Gilmour: Does the Minister agree that, apart from the increases in nationalised industry prices, the specific increases in insurance stamps, the 10 per cent. VAT on petrol and increased company taxation will all militate against the growth of the tourist industry, making it more difficult for that industry to survive?

Mr. Millan: I have received no representations from the industry, and none of those points was put to me by the Tourist Board last Friday. The board seeemed very optimistic about the future.

Mr. MacArthur: Will the Minister take a less complacent attitude to the problem? The Budget bears heavily on the tourist industry, as it does on industry generally in Scotland. Will the Government approach this matter seriously and make some attempt to tell the House how much the Budget will cost Scottish industry?

Mr. Millan: Far from being complacent about the situation, and in spite of the appalling economic inheritance left to us by the Conservatives, I was delighted to be able to announce to the Tourist Board on Friday that we were increasing its assistance in the current year by £175,000.

Expenditure

Mr. McElhone: asked the Secretary of State for Scotland what is the amount of public expenditure in Scotland for the period 1973–75, compared with the level proposed when the Estimates for 1973–74 were first published.

Mr. William Ross: At 1973 survey prices, the expenditure of the Scottish departments was forecast in Cmnd. 5178 of December 1972 at £1,635 million for 1973–74 and £1,617 million for 1974–75. Following subsequent policy changes, the figure for 1974–75 at December 1973 was £1,540 million. The estimated out-turn for 1973–74 is £1,550 million.

Mr. McElhone: The savage cuts imposed on Scottish local authorities by the last Government are making it extremely difficult for them to carry out their programmes this year. Will my right hon. Friend agree to publish the details of those cuts so that we may more readily understand that the Government will not be able to repair the damage in their first few weeks or, indeed, the first few months of office.

Mr. Ross: The facts are fairly plain and I was surprised to see the hon. Member for Ayr (Mr. Younger) raising a smile because the estimated out-turn for 1973–74 shows a drop of £85 million in Scotland. For 1974–75 the original estimates have already been reduced by £77 million
The details are matters for the local authorities because once we fix the rate support grant for them it is their job to determine their own priorities in the light of the savings.

Mr. Bruce-Gardyne: Will the right hon. Gentleman always bear in mind that the greatest scourge to the people of Scotland at present is inflation and that the greatest cause of inflation is excessive public expenditure?

Mr. Ross: Yes, indeed. I hope that the hon. Gentleman has listened to his hon. Friend urging further expenditure on us today.

Mr. Harry Ewing: I recognise the disastrous situation which the Government were left by the previous administration, but I should like my right hon. Friend to look again at allocations, particularly for 1974–75, and to take account of the needs applied by the Social Work (Scotland) Act, with particular reference to the need for an increase in places in list "D" schools which now have fewer places than in 1968? A serious situation still exists in terms of psychiatric assessment places and various associated problems.

Mr. Ross: My hon. Friend will appreciate that in present circumstances it is difficult to do much about allocations for 1974–75. However, with regard to future years we must have a review of our policies and priorities

Mr. Teddy Taylor: Does the right hon. Gentleman agree that during the three years in office of the Conservative Government there was a major expansion in the services offered by local authorities? So far as the so-called cuts are concerned, will he restore them? More important, will he make immediate representations to the Chancellor of the Exchequer to relieve the burden of the Budget on local authorities, bearing in mind that a Labour treasurer of Glasgow said last week that the Budget would raise Glasgow rates considerably?

Mr. Ross: The hon. Gentleman cannot run away from the consequences of his own incompetence. With regard to local authorities, the rate support grant is the one which I found on the table when I arrived in office, and is as worked out by hon. Gentlemen opposite.

The hon Gentleman knows that, and that we had to add to the grant, particularly for Glasgow and one of the other cities. The Opposition must face their failings in this matter, rather than blame us. The Budget is related to the economic circumstances of the country, and the hon. Gentleman should appreciate that.

Oil Platforms

Mr. Fairgrieve: asked the Secretary of State for Scotland how many applications have been approved for sites to construct oil platforms in Scotland during the last six months; and if he will make a statement.

Mr. William Ross: One

Mr. Fairgrieve: I thank the right hon. Gentleman for that reply. I request that he speeds up future applications so as to prevent service industries having to go, for example, to Norway or Iceland, thus preventing us from building up a Scottish indigenous service industry for oil development, which could go all over the world.

Mr. Ross: We should not exaggerate the position too greatly. Nine platforms have been approved, eight of them without any local public inquiry. In terms of local public inquiries it is necessary to get the balance right in relation to local interests and similar matters. There is a limit to what can be done to speed up dealing with these applications, but we are looking at the planning procedure to see how we can more effectively get what is desired within the law.

Mrs. Winifred Ewing: Will the right hon. Gentleman confirm that he has no applications or plans to improve sites at Lossie Forest, Culfin Forest and Burghead Bay?

Mr. Ross: If the hon. Lady will put down a Question on this matter I shall be glad to answer it

Mr. Alexander Fletcher: The right hon. Gentleman has mentioned reviewing planning procedures. When is he likely to come forward with new proposals on this important matter?

Mr. Ross: There may not be new proposals. As I have suggested, there may be administrative changes within the


existing law, but I shall let the hon. Gentleman and the House know as much as I can about the matter.

Hunterston

Mr. Lambie: asked the Secretary of State for Scotland what representations he has received from Ayr County Council about proposed developments at Hunterston; and if he will make a statement.

Mr. William Ross: Ayr County Council has asked to meet me, and I will arrange this as soon as I have clarified certain matters.

Mr. Lambie: Why is my right hon. Friend still refusing to give planning permission for an oil terminal and oil refinery? Is he aware that future steel developments at Hunterston and Garnock Valley are dependent on the siting of the oil refinery at Hunterston and that Ayr County Council is speaking for public opinion in Scotland in demanding an immediate start to the oil terminal and refinery at Hunterston?

Mr. Ross: That is an exaggeration of the position. I realise that as soon as I sit down an hon. Gentleman who is interested in oil will rise and tell me the opposite in relation to this matter. My hon. Friend should appreciate that this is a complex matter and that it is my responsibility to ensure that any arrangements and decisions are made within a planning decision made by the previous Secretary of State. We have obligations and responsibilities into which we cannot rush.

Mr. Corrie: I thank the right hon. Gentleman for that remark. I was about to say that, because I fought the election in my constituency on this subject, and I came back with an increased majority. Now that the oil terminal has started, may I have an assurance on the conservation aspect of the terminal—that it will be carefully looked after, according to the letter of the law, and that adequate compensation will be given to farmers and farm workers from those farms that have disappeared because of the development? Is it not a disgrace that some of these people have no homes or jobs because of the development?

Mr. Rees: That is an entirely different matter, but I shall certainly look at it.

All these conservation aspects are relevant to the decision that I have to make.

Mr. Teddy Taylor: We appreciate that this is a difficult problem, but will the right hon. Gentleman give an assurance that he will not allow Hunterston to become sterilised for 20 years by giving the site wholly to the BSC?

Mr. Ross: The hon. Gentleman must not seek to anticipate a decision which I have to make. He must appreciate that Lord Polwarth, when Minister of State, told Ayr County Council, I think in August of last year, that he hoped to come to decisions by the end of the year. We can understand the frustrations of my hon. Friend the Member for Central Ayrshire (Mr. Lambie) about this, but the hon. Gentleman must not lead me into temptation

Newspaper Industry

Mr. Bruce-Gardyne: asked the Secretary of State for Scotland if he will instruct the Scottish Development Department to carry out an in-depth investigation into the condition of the Scottish newspaper industry; and if he will publish the result.

Mr. William Ross: No, Sir. My right hon. Friend the Prime Minister has said in the House—[Vol. 870, c. 1320–22.]—that the Government are urgently considering the possibility of an inquiry into the newspaper industry. The hon. Gentleman must await the Government's decision.

Mr. Bruce-Gardyne: I recognise the reasons for the right hon. Gentleman's reticence, but is it not a fact that no Government of any political colour can prevent the bosses of NATSOPA and SOGAT from pricing their members out of employment if they are determined so to do? I put to the right hon. Gentleman two matters which he should investigate. Is he responsible for the Price Commission in relation to the tragic demise of Beaverbrook Newspapers in Scotland? I refer him to what a member of the Price Commission herself said in public on the matter. Secondly, there is the allegation in the House by the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid) that new machinery was moved from Glasgow to the Evening Standard in London—


although never used—for reasons connected with regional grants. This allegation must be investigated and cleared up.

Mr. Ross: I assure the hon. Gentleman that in relation to the exhaustive discussions I have had with Beaverbrook Newspapers and others I got the impression that it was not purely a Scottish matter, and the hon. Gentleman in his intervention did not relate it to anything that was purely Scottish. I remember that the Leader of the Opposition said that the management of the industry was also worth inquiring into.

Mr. Dalyell: If there is to be an investigation may we have an inquiry into the question why Beaverbrook Newspapers, which for many years has lectured us on how to conduct industrial relations, has offered such paltry redundancy terms?

Mr. Ross: It is a question not only of redundancy terms but also of the shortness of the notice given to the people concerned. This reflects considerably on industrial relations in the newspaper industry.

Rent Rebates and Allowances

Mr. Younger: asked the Secretary of State for Scotland whether he will now raise the needs allowance for the rent rebate and rent allowance schemes, in order to give help to those on lower incomes with the payment of their rents.

Mr. Millan: The level of the needs allowances for rent rebate and allowance schemes is being kept under review.

Mr. Younger: Does the Minister agree that the family with the lowest earnings suffers most from inflation and the rising cost of living? How, in that context, can he possibly justify introducing a rent freeze which gives a present of £26 a year to all those on high incomes and nothing to those with full rent rebates? Are these correct Socialist priorities?

Mr. Millan: That is not true, but we are, in many other aspects of our policy, such as those dealing with food subsidies and the rest, doing a great deal to help the lower-paid workers. I hope that we shall have the support of hon. Members opposite in doing so.

Mr. Robin F. Cook: Does my hon. Friend not agree that one of the major

arguments against any means-tested benefit is that the income levels that it sets out are liable to fall behind because of inflation and that, for that reason and a number of others, it is far better to set rents at a level that the average family can afford than to increase them to the point at which the family on average earnings has to rely on a means-tested benefit, as was the avowed policy of the last Government?

Mr. Millan: I do not want to be taken as being in agreement with anything that the last Government did, but I cannot fully accept what my hon. Friend says. There is certainly a place for rent rebate schemes.

Mr. Buchanan-Smith: Can the hon. Gentleman explain any further in what sense £500 million in food subsidies is a social priority in helping those who are really in need, any more than the rent freeze was for tenants? If help needs to be given—I support it when it is needed —would not it be better to give to those in need rather than right across the board?

Mr. Millan: The hon. Gentleman seems to have forgotten that these subsidies are directed towards the basic foodstuffs which play a disproportionate part in the budgeting of lower-paid families

Mr. McElhone: May I assure my hon. Friend that the people of Scotland welcome the rent freeze imposed by this Government? Will he press his right hon. Friend in the Cabinet for an early repeal of the Housing (Financial Provisions) Scotland Act? If he does not, many local authority social work departments will break down because of the many families who are experiencing difficulties as a result of the provisions of this iniquitous Act

Mr. Millan: My hon. Friend is right to say that the rent freeze has been widely welcomed in Scotland

Grant-Aided Schools

Mr. Rifkind: asked the Secretary of State for Scotland whether he will make a statement on the policy of Her Majesty's Government towards grant-aided schools in Scotland.

The Under-Secretary of State for Scotland (Mr. Robert Hughes): My right


hon. Friend is considering the future of the grant-aided schools in Scotland but he is not yet ready to make a statement.

Mr. Rifkind: Will the Minister assure us that before any change in policy towards the grant-aided schools is announced there will be the fullest consultation with the grant-aided schools to try to ensure, as far as possible, that there will not be the inconvenience and disruption that were caused by the last Labour administration's change of policy in this respect?

Mr. Hughes: We shall certainly consult the grant-aided schools, but it will be about how the policy will operate in integration and not about whether such a policy is necessary.

Mr. Monro: What increase in grant will be paid this year, and when?

Mr. Hughes: I cannot answer that without notice.

House Building (The Borders)

Mr. David Steel: asked the Secretary of State for Scotland if he will take steps to accelerate the house building programme in the Borders.

Mr. Millan: My right hon. Friend is anxious that local authorities should build as many houses as they need to meet their housing requirements. He has recently authorised the Scottish Special Housing Association to build an additional 100 houses in Jedburgh and Kelso.

Mr. Steel: Does the Minister of State accept that in the time of the last Labour Government one of the methods of success in accelerating the house building programme was the personal visits undertaken by the then Minister responsible, the hon. Member for Greenock and Port Glasgow (Dr. Mabon), to local authorities? May we have a repeat of that sort of tour? If Scottish Office Ministers are too overworked, will the Minister have a word with the Prime Minister about getting another one?

Mr. Millan: In due course, I hope that either I or my right hon. Friend the Minister of State in the Lords will be able to have these consultations. One of the difficulties about the housing position in the Borders at the moment is that during the period of the last Government the

number of completions by public authorities was reduced to only a third of what it was in 1970.

School Building (Moray and Nairn)

Mrs. Winifred Ewing: asked the Secretary of State for Scotland if he will give details for Moray and Nairn of the school building programme as to cost and location for the past five years and for the future so that as plans are already drawn up.

Mr. Robert Hughes: As the reply is lengthy, I will, with permission, circulate details in tabular form in the OFFICIAL REPORT. I can, however, tell the hon. Lady that in the five years to 31st March 1974 school building projects other than minor works started by Moray and Nairn Education Authority amounted to £1,973,000, plus £24,000 included in the programme but not yet started.

Mrs. Ewing: Will the hon. Gentleman be sympathetic to the problems created by the sudden influx of population into my constituency? I accept that it is not alone in that, but I hope that the hon. Gentleman can be sympathetic to it. Both Elgin and Lossiemouth need senior schools are vastly overcrowded. Does Findhorn to Kinloss and from Kinloss to Forres to go to school, and all these schools are vastly over-crowded. Does the hon. Gentleman consider that both the senior schools should go on? There is a great fear that only one will go on and the other will be sacrificed to its needs while all the time more population is coming into this area.

Mr. Hughes: I shall bear the hon. Lady's remarks in mind, because I have experience of people coming in to my own constituency and the surrounding areas. The building programmes for the future years have not been concluded. We will take account of the needs of the areas. At the end of the day, it is for the local education authority to determine its priorities in relation to the programme that it submits.

Dr. M. S. Miller: If, as hon. Members opposite so often claim, people are leaving Scotland. how does it come about that everybody is going into the hon. Lady's constituency?

Mr. Hughes: I do not know that I can answer that, except that it is possible


that two things are happening—that people are leaving Scotland and are also moving about within Scotland.

Mr. Gray: Despite the attraction of the hon. Lady in Moray and Nairn, will the Minister please remember that probably the most important area of all in the oil-affected counties is that of Ross and Cromarty? When he is looking at his figures, will he pay particular attention to Easter Ross?

Mr. Hughes: We certainly take into consideration every area. Although there are problems in the north and north-east of Scotland, there are problems in the west of Scotland as well. Our difficulty, bearing in mind the legacy that we have inherited, is that we have to balance the priorities very carefully.

Mr. Teddy Taylor: Will the hon. Gentleman stop talking about his legacy and inheritance in Scotland? Will he at least accept that when he came to power unemployment was falling sharply, job vacancies were at an all-time high and the rate of immigration at an all-time low? Will he at least assure us that the reduction in employment will continue and not rise under a Labour Government, as it did before?

Mr. Hughes: I can understand the hon. Member's embarrassment. It was only yesterday that he was complaining bitterly about the part-time teaching in Glasgow and the west of Scotland which was the result of his administration.

Following is the information:

In the five years to 31st March 1974, the following school building projects other than minor works were started by Moray and Nairn Education Authority:


Project
Cost (£'000's)


Old Academy, Forres: conversion to primary school
86


East End Primary School, Elgin: extension
138


Lossiemouth High School: temporary classrooms
25


Milne's High School, Fochabers: temporary Classrooms
27


Forres Academy: swimming pool
72


Hopeman School: conversion to primary school
14


Seafield Primary School: kitchen/dining unit
27


West End Primary School, Elgin kitchen
9


Lossiemouth High School: games hall
46





Nairn Academy: new school
1,467


West End Primary School, Elgin: improvements
20

Improvement work at Rothes Primary School included in the 1973–74 programme at an estimated cost of £24,000 has still to be started.

With its allocations for the 1974–75 programme year the authority plans to start the following projects other than minor works:



Estimated cost (£'000's)


Auldearn Primary School: modernisation
30


Bishopmill Primary School extension
80


Elgin new nursery school
38


Llanbryde: nursery class extension
33

Allocations for programmes after 1974–75 have not yet been decided, except in the case of the nursery education building programme for 1975–76. The authority plans to start a new nursery school at Forres, estimated to cost £38,000.

Economic Situation

Mr. MacArthur: asked the Secretary of State for Scotland if he intends to publish a White Paper on the outlook for the Scottish economy.

Mr. William Ross: Our first objective is to review the situation and to consider urgently what measures are needed to stimulate development and employment in Scotland. We can consider the question whether a White Paper would be helpful after that.

Mr. MacArthur: Is the right hon. Gentleman aware that a White Paper or some form of statement is urgently required in Scotland? Is he aware of the widespread concern in Scotland about the disincentive effect on Scottish industry of the last Budget, which has added considerably to the financial burdens of industry? Is he further aware of the concern among householders, who now, for the first time, are realising the heavy cost to them of the Labour Government's Budget? On what basis does the right hon. Gentleman challenge my figure that the cost of the Budget to the householder will be £1·56 a week, or £81 a year? Is he aware that this is based on a study of the Government's own figures of household expenditure in Scotland? If he wishes to correct the figures, will he give the figures as he sees them so that we may know the position?

Mr. Ross: I thought that the hon. Gentleman was quoting his own White


Paper. If we are to give the right outline of the situation at present we have to start with a prelude setting out the situation before the Budget. I assure the hon. Member that unemployment in Scotland was not falling; it was rising. We were faced with a three-day working week, inflation, a calamitous drop in housing and a lack of confidence by industry. The hon. Member should not be asking me for a White Paper; in that situation it would be a black paper.

Mr. Michael Clark Hutchison: Are there not too many White, Green and other Papers these days?

Mr. Ross: I entirely agree.

Mr. Younger: Will the Secretary of State, as Scotland's economic Minister, be careful that he does not write down the real achievements of the Scottish economy in recent years? When considering publishing the White Paper. will he bear in mind that, by common consent, 1973 was the best year for the Scottish economy since the war and that emigration was the lowest for many years, as was unemployment? Will he remember that it is all very well having political wishes to put across political points but that he has a responsibility to all the people of Scotland for confidence in the Scottish economy?

Mr. Ross: That is why I regret the kind of exaggerated statements that we are getting from hon. Members of the Opposition. Let them not inflate their achievements in respect of that. The unemployment figures for the whole time that hon. Gentlemen were in Government averaged over 100,000 per month. They never fell as low as they were when the Leader of the Opposition made a speech in Dundee, I think, just before the 1970 General Election, when he said that the Conservatives would not rest until they got the figures down. They did not get the figures down to the point at which they were then.

School Milk

Mr. Selby: asked the Secretary of State for Scotland if he will introduce measures to restore to pupils over the age of 7 years in primary schools in Scotland a supply of milk without charge.

Mr. Robert Hughes: This is one of the questions to which my right hon. Friend is giving urgent consideration.

Mr. Selby: I am not satisfied with that answer. It avoids facing the issue. We are bombarded daily by the advertisement "Drink a pinta". Surely there is far too much milk. We should regard it as a priority to restore free milk to children who need it most—children between the ages of 7 and 12 who expend a lot of energy.

Mr. Speaker: Order. The hon. Gentleman must ask a question.

Mr. Hughes: I take my hon. Friend's point. That is certainly something which we criticised greatly when in Opposition, and certainly we are considering it at present

Mr. Monro: How many schoolchildren receive free school milk, and at what cost?

Mr. Hughes: I cannot answer that question without notice.

Improvement Grants

Mr. Adam Hunter: asked the Secretary of State for Scotland what representation he has had from private housing agencies for financial assistance to carry out improvement schemes in older houses in the county of Fife; and if he will make a statement.

Mr. Millan: None, Sir

Mr. Hunter: Is my hon. Friend aware that we in Fife resent private housing associations taking over housing improvements in certain areas? Is he aware that 93 former National Coal Board houses at Blairhall have been purchased by the North Fife Housing Agency, with the intention of converting and improving them? Is my hon. Friend also aware that this housing association had to rely on Fife County Council giving it a grant to cover the purchase price of those houses and that it also expects loans, subsidies and improvement grants from the Scottish Development Department? Would not this have been far better as an obligation of the county council rather than a matter for a private housing association?

Mr. Millan: I shall certainly look into the various points which my hon. Friend


has mentioned. I knew that the North Fife Housing Association had approached the previous Government about this matter and that the statutory position was explained to it. No approach has been made to me, but I shall look into the matters which my hon. Friend has mentioned. The Housing and Planning Bill, which was a casualty of the election, contained provisions about improvements. It is the Government's intention to introduce their own legislation, when many of these matters can be discussed.

Mr. Ancram: Will the hon. Gentleman give an assurance—following the previous question—that he will listen to representations made to him by charitable private housing associations in Scotland, which have done much to alleviate many of the housing problems in Scotland?

Mr. Millan: Certainly. I agree with that.

Sir John Gilmour: Does not the hon. Gentleman agree that it shows initiative on the part of the people of North Fife to wish to put right houses that have fallen into decay?

Mr. Millan: I cannot comment on that. As I have already explained, I am not aware of the circumstances. As far as I am aware, there was no direct Government responsibility under the previous administration. Nothing has been put to me since the General Election. But I shall certainly look at the matter.

Mr. William Hamilton: asked the Secretary of State for Scotland if he is yet in a position to make a statement on housing improvement grants.

Mr. Gourlay: asked the Secretary of State for Scotland what representations he has received from local authorities regarding the extension of the 75 per cent. improvement grant for local authority house improvement schemes, where the contracts were signed before 23rd June 1973; and if he will make a statement.

Mr. William Ross: I have received one representation from the Royal Burgh of Burntisland about the question of the 75 per cent. improvement grant for local authority schemes and this is one of the aspects of housing policy that I and my right hon. Friends are considering

urgently and hope to make an announcement about soon.
I am today resuming the approval of local authority schemes for housing and environmental improvement. Many proposals have been held in my Department since my predecessor suspended approvals on 10th January. To enable the most urgent of these to be dealt with first, new proposals will not be accepted until the first week in May.
I propose to discuss with representatives of the local authorities the best way of sharing fairly the resources available for house and environmental improvement, so that priority is given to the areas of greatest need and the larger authorities are in a position to plan the systematic improvement of their older housing stock.

Mr. Hamilton: Is my right hon. Friend aware that that answer will be greeted with acclamation by local authorities in Scotland and that it is another indication of the present Government's concern for the housing problem in Scotland, which was so much neglected by the previous Government? Will he give an undertaking to make a quick decision on improvement grants available to individual householders, because many of us have had complaints about this, while there has been delay in the supply of materials for reasons which are quite beyond the control of individuals?

Mr. Ross: On the first point, yes. Wherever I have gone recently, local authorities have been very concerned about the hold-up in relation to the schemes which they had already put forward. I am very glad to be able to make this announcement. In relation to the other matter, my hon. Friend will appreciate that this scheme was supposed to last for one year. It was supposed to end last June, and there has already been an extension of one year. As I have said, we are having a look at the matter.

Mr. David Steel: On the last point, the Secretary of State, in answer to a Question from me a couple of weeks ago, said that he hoped to make a statement soon. How soon is "soon"? We recognise that the scheme has been extended once, but there is a particular problem about those who already have schemes in the pipeline and are held up by a shortage


of building materials. Surely a short extension for those schemes only would be justified.

Mr. Ross: In looking at the practicalities, the hon. Gentleman will find that this is not an easy matter. Where does one draw the line? The line was laid down a long time ago, and people knew about it. As regards how soon is "soon", I hope to be able to make an announcement this month.

Mr. Gourlay: Is my right hon. Friend aware that many authorities will be pleased about his reply today? Despite many representations, the previous Government flatly refused to give any assistance on this matter. Therefore, my right hon. Friend's reply is all the more welcome. But again, how soon is "soon"? Will my right hon. Friend ensure that local authorities are made aware of the new arrangements as early as possible, and at least before the end of this month?

Mr. Ross: The new arrangement that I have announced will go very quickly to the local authorities. I am sure that they will be knocking at St. Andrew's House door before the week is out. On the other matter which my hon. Friend mentioned, it is perfectly true that local authorities were getting to a difficult point. One local authority wrote saying that it was on the point of having to pay off some of its employees because it had reached the limit of what it could do and it required a raising of the moratorium.

Mr. Buchanan-Smith: Does not the right hon. Gentleman acknowledge that the tremendous rate of uptake of grant is a measure of the success of the scheme introduced by the previous Government to help local authorities to improve their houses? Does not he agree that the small print of his reply, in which he says that the assistance that he now hopes to give is being related to the resources available, is simply a continuation of the previous Government's policy?

Mr. Ross: It is hardly a continuation of the previous Government's policy when that Government's policy ended the matter and said no more. Concerning the scheme, I have already paid tribute to the work that has been done. Most of it was done by local authorities.

One finds that by looking at the numbers. That is why it was disastrous when it was stopped in respect of them. In relation to the origins of the scheme, the hon. Gentleman will realise that the scheme started under the Labour Government's Act of 1969.

Offshore Oil

Mr. Gordon Wilson: asked the Secretary of State for Scotland whether he will prepare a national economic plan with proposals to indicate how Scotland's offshore oil resources can best be used for the expansion of industry and the improvement of the standard of life of all the people in Scotland.

Mr. William Ross: No, Sir. We have already announced our intention to ensure that Scotland and regions elsewhere in need of development derive maximum benefit from offshore oil and gas. I am determined that Scottish industry should receive a larger share of the market created by oil developments, and the announcement last week of the expansion of the Offshore Supplies Office and the transfer of its headquarters to Scotland is an immediate demonstration of this.

Mr. Wilson: Does the right hon. Gentleman realise that the economic situation of Scotland is difficult and severe and that, with an unemployment rate of 4·2 per cent. compared with 1 per cent. in Norway, the arrangements he has in mind for ad hoc benefit from oil are insufficient?

Mr. Ross: As I have not announced any arrangements, I do not see how they can be insufficient. The hon. Gentleman should appreciate exactly what is being done in Scotland, and how much money is being spent there—and we have not got a drop of oil yet. One of the first things we did concerned the announcement which had already been made about REP. We said that it would be continued, and that means £40 million per year to Scotland. It is time the SNP let people in Scotland know exactly how much we are doing.

Mr. Dalyell: What will the Government do to make sure that we take advantage of the richest oilfield in the Western European land mass, namely, that off Cornwall? Is not talk of Scottish oil nonsense, and against the long-term


deep self-interest of Scotland in the 1980s?

Mr. Ross: I have always been con-concerned to prevent the economic fragmentation of the strength of Britain. [Interruption.] Yes, and it is from the strength of Britain that many of the millions we are spending in Scotland come. The attitude of hon. Members belonging to the Scottish National Party is so parochial that it is unworthy of the Scotland I know.

Mr. Bruce-Gardyne: Will the right hon. Gentleman continue to resist pressure from the SNP to publish any more national economic plans, in view of the humiliating fiasco which ensued from the last one he tried? Will he examine carefully the arrangements for supplying offshore oil rigs, as his hon. Friend the junior Minister in the Department of Energy is apparently unaware that in the Gulf of Texas and other American offshore areas only American ships are allowed to supply, and no such arrangement exists on this side of the Atlantic?

Mr. Ross: I seldom take the hon. Gentleman's advice on my future actions, but there may be some validity in his last point.

Thermal Insulation

Mr. Harry Ewing: asked the Secretary of State for Scotland if he will issue advice to Scottish local authorities that when they seek designs for new houses they should give the fullest consideration to the need for maximum insulation in order to reduce heating costs.

Mr. Millan: Design guidance on thermal insulation for new local authority houses is given in the Scottish Housing Handbook Part 3. My right hon. Friend's Department intends to supplement this shortly. My right hon. Friend is also about to consult interested bodies, including local authority associations, on proposals for improving the thermal insulation standards laid down in the Building Standards (Scotland) Regulations.

Mr. Ewing: I am grateful to the Minister for that reply, which clearly indicates the emphasis the Government are placing on thermal insulation in new houses. Will my hon. Friend give an undertaking that the Department will

have a close look at what is happening in Scandinavian countries, and that if there is anything to be learned that would help housing in Scotland we, too, will employ the methods of thermal insulation employed there?

Mr. Millan: I shall look into that. It is a question of learning from all relevant sources. I shall see that that point is taken into consideration.

Mr. MacArthur: Will the Minister consider introducing insulation grants for existing houses to help householders cope with the sharp increases in coal and electricity prices later this year?

Mr. Millan: It is a concern of the Government that the electricity industry was left in such a state that if we were now to make it economic we should have to increase the domestic consumer's bill by no less than 50 per cent. I am glad to say that we have been able to restrain those substantial increases. That is another matter very much appreciated in the hon. Gentleman's constituency. I am sure that he keeps telling his constituents about all the benefits they are receiving from the Labour Government.

Clyde Estuary

Mr. Corrie: asked the Secretary of State for Scotland if he will pay an official visit to the Clyde Estuary.

Mr. William Ross: While I have no plans for an official visit, I have no doubt that I shall be a frequent visitor to areas bordering the Clyde Estuary.

Mr. Corrie: I thank the right hon. Gentleman for that reply, but I am sorry that he is not coming to have one last look at the beauty of the Clyde before it is destroyed by the development there. Do I take it from yesterday's announcement in the House that the Polaris base in the Clyde Estuary will be staying on for the foreseeable future?

Mr. Ross: As I live on the Clyde Estuary, I should like to visit it a little more often than I do. I am conscious of the concern about the Clyde, but it was the hon. Gentleman's right hon. Friend the previous Secretary of State who made the decision about the planning inquiry. In principle, the case for development at Hunterston, the area most


concerned, has already been made. The question is what kind of development there should be there.

Mr. George Lawson: Will my right hon. Friend bear in mind that in the Clyde Estuary and the Forth Estuary, with a narrow belt of land between, Scotland has an invaluable geographical position in relation to the European Community? Will he do his utmost to ensure that we develop our relations with the Community to the benefit of Scotland?

Mr. Ross: I hope that we use the two estuaries and developments there to the benefit of the people of Scotland and the people of the rest of the world.

Devolution

Mr. Anthony Stodart: asked the Secretary of State for Scotland when the Government propose to start discussions with representatives of public opinion on further devolution; and with what bodies these discussions will take place.

Mr. William Ross: Discussions on further devolution will be held in Scotland as soon as possible. As well as holding talks with the political parties, we intend to consult bodies representing important sectors of public opinion in Scotland.

Mr. Stodart: There is a fair consensus, I think in all parties, that it might be a good thing for certain Scottish domestic legislation to be carried out by a body in Scotland, thus perhaps speeding up the process of legislation here, but will the right hon. Gentleman make it quite clear that, despite the Prime Minister's assurance yesterday that all bodies of opinion would be considered, total independence in such matters as foreign affairs and defence is absolutely out?

Mr. Ross: I think that my right hon. Friend made it clear yesterday that the question of separation was completely out.

Mr. Grimond: Does the fact that conversations are now being held by the Government mean that they are convinced that some form of devolution, though not independence, is necessary, or are they still waiting for Lord Crowther-Hunt to make up their minds for them?

Mr. Ross: The right hon. Gentleman should have been here when we had further discussions about that. I quoted what was actually stated in the Kilbrandon Report, which was that the discussions were necessary so that there should be a formulation of narrower opinion in Scotland in relation to the objectives which the Kilbrandon Commission put forward.

Mr. Teddy Taylor: Does the right hon Gentleman envisage that part of the consultations he mentioned may be a debate of one day or two days in the Scottish Grand Committee?

Mr. Ross: Yes, Sir. I hope that we shall have in the House more than one debate on the Kilbrandon Report

Beef Production

Mr. Monro: asked the Secretary of State for Scotland what financial help he intends to give to the producers of fat cattle.

Mr. William Ross: As my right hon. Friend the Minister of Agriculture, Fisheries and Food announced on 25th March, the Government will be submitting proposals to increase the calf subsidy by £10 per calf. This will benefit beef producers as a whole and is in addition to the existing range of beef production grants.

Mr. Monro: Is the right hon. Gentleman aware that to give a calf subsidy to some calves in July is no help to those farmers who are sending fat cattle to the markets now? Does he accept that since his right hon. Friend the Minister of Agriculture, Fisheries and Food went to Brussels there has been a catastrophic drop in confidence in the beef industry, and that this will be to the longterm harm of not only agriculture but consumers?

Mr. Ross: Confidence in the beef industry and the changes in prices have nothing to do with my right hon. Friend's visit to Brussels. The hon. Gentleman should appreciate that there were calls for action on the matter while he was still in office, and his right hon. and hon. Friends did nothing about it.

Mr. Fairgrieve: Does the right hon. Gentleman realise that if the beef industry


were merely receiving the same subvention prices as are now operating in Brussels it would be all right?

Mr. Ross: The hon. Gentleman should appreciate what we have done. We had to bear in mind the needs of the consumer as well. I thought that the hon. Gentleman would have appreciated that.

Mr. Watt: Is the right hon. Gentleman aware that only an early return to the deficiency payments scheme will satisfy the beef producer?

Mr. Ross: The hon. Gentleman is a bit late with that one.

Mr. Buchanan-Smith: Does the right hon. Gentleman realise that at Brussels his right hon. Friend the Minister of Agriculture, Fisheries and Food sold the agricultural industry down the river by his abandonment of the intervention system? Does he realise that it is to the advantage not only of the beef producer but of the consumer that adequate supplies are forthcoming? Under the policy which the Government are following the consumer, as well as the farmer, will eventually be sold down the river.

Mr. Ross: If anyone sold anyone down the river in relation to Brussels, Opposition Members must take responsibility for the fact that we are no longer free agents.

Mr. Kimball: Is the right hon. Gentleman aware that one way in which to help the beef industry will be for the right hon. Gentleman to use his influence to ensure that the licences for the export of cattle are reissued very quickly?

Mr. Ross: That is worth considering. The hon. Gentleman will appreciate that the industry receives assistance of £100 million a year from the Government.

NORTHERN IRELAND

Rev. Ian Paisley: (by Private Notice) asked the Secretary of State for Northern Ireland if he will make a statement on the wave of violence in Northern Ireland during the past two days.

The Secretary of State for Northern Ireland (Mr. Merlyn Rees): First, I apologise to the House for the length of

my reply. I considered it important that all the facts should be given, which perhaps would normally not be appropriate in answer to a Private Notice Question.
The House will have noted with great regret the wave of violence which has again beset Northern Ireland in the last two days. Reports which I have received from the security authorities this morning indicate that there were comparatively few incidents on Monday last but two of them were of a major nature. In one in Armagh an extensive fire was started by incendiaries planted in a shop. The fire spread and destroyed eight shops in all. The second major incident was a car bomb attack on the RUC station, Ballygawley: two cars were hijacked for the attack; about half the station was demolished but there were no casualties
The violence increased yesterday and was mainly in Belfast. Two 100 lb. car bombs, one delivered by a proxy driver, exploded in the city centre causing considerable damage but no serious casualties. A third car bomb was neutralised in the Crumlin Road. Ten incendiaries were planted in Belfast in six different shops: eight of the devices exploded but no shops were seriously damaged. Fifty-five vehicles were hijacked and used to block roads in the city, mainly in the Falls Road and Upper Springfield Road areas. Eleven of these vehicles were burnt out.
There was also 27 shooting incidents in the city, 12 in Andersonstown, where there was an exchange of fire between terrorists and a mobile patrol. A security forces vehicle was hit. Two Catholics who were in a nearby club were hit in the exchange of fire—one fatally. There were eight blast bomb incidents, including one which seriously wounded a 17year-old Catholic in the New Lodge.
Outside Belfast, bombs exploded yesterday in a partially built pub near Moy and in a newsagents in Portadown. Three incendiaries started small fires in Dungannon. Seven incendiaries were planted in Newry—one was neutralised. The remaining six started fires, one of which was serious. In Donaghadee, shots were fired at military vehicles outside the RUC station following the arrest of 10 Protestant suspects. Two soldiers were wounded and two civilians caught in the crossfire were wounded.
The House will note that in all this violence in Belfast there are only two explosive bombs. A most disturbing feature is the large number of incendiary devices which are believed to have been planted mainly by young women and girls, and the extensive hijacking which, I am informed, was undertaken by very young people who were clearly acting under a plan devised by the IRA. This pattern emphasises two points to which I referred both in the debate and in my earlier statement—namely, the dangerous new development of incendiary devices against which armed soldiers can play only a limited part and the increasing involvement, under direction, of not only young people but even young children.
The last few days have been a bad period, and it is no consolation to the people of Northern Ireland that, in spite of these tragic incidents which were deliberately designed to disrupt the life of the community, the level of violence in recent months is very much below that before Operation Motorman in July 1972. We all appreciate the anger of the people of Northern Ireland with the Provisional IRA, which is showing once again its lack of understanding of the effect of its brutal campaign on the people whom it wishes to convert to its own views on the future of Ireland. Its campaign is deliberately designed to frustrate the recent political developments in Northern Ireland, which, it fears, offer hope of future peace and stability. Her Majesty's Government ask the great majority of the people of Northern Ireland who believe in political action not to give the Provisional IRA any hope by their reactions that violence of itself can bring down the new institutions of Northern Ireland.
I wish to make it clear to the House that it is Her Majesty's Government's firm policy to act against terrorism from whatever quarter it may come. My hon. Friend the Minister of State had a follow-up meeting this morning with the Chief Constable and the GOC to discuss proposals for dealing with terrorist attacks. While long-term changes in security policy must await the policy review that is being undertaken, firm action is immediately to be taken by the security forces. It would, however, obviously he unwise

to say what will be done or to indicate its timing. But there will be specific measures involving a large part of the community, and they will be clearly and specifically explained as and when they come into operation. At the same time, I must stress that the security forces are acting within a society where people still live a normal life. They go to work in the morning; travel on buses; and fetch their children from school. That normal life must continue.
But action taken by the security forces is bound to cause inconvenience and make life difficult for the community. I am sure that the people of Northern Ireland will understand, and support, what is to be done. Above all, the community itself must help to deal with the new threat. If business and commercial premises are to be put at risk by the fire bomber, those responsible for the premises must themselves do everything possible to protect their property against the fire bomber. We for our part intend to introduce measures of advice to deal with that.
It would be idle to pretend that guerrilla warfare can easily be dealt with in a modern society; it is the enemy within. But Her Majesty's Government will continue to deal with the security threat, in both its old and its new forms. It would be a tragedy if the terrible deeds of the Provisional IRA led others to lose their faith in peaceful political action.

Rev. Ian Paisley: I thank the right hon. Gentleman for giving the full details to the House. Is he aware that the Provisional Irish Republic Army said that it would bomb and burn the centre of Armagh and that it now glorifies in the fact that it carried out the operation which it threatened? Further, is he aware that Mr. Faulkner has said that Sunningdale is irrelevant in view of the present serious security situation? Will he give an assurance to the House that the Sunningdale agreement will not be ratified during the parliamentary recess.
Has the right hon. Gentleman any details of the murder of Lieutenant Colonel George Saunderson, a retired officer of the UDR, who was murdered before his class today in County Fermanagh? Will the right hon. Gentleman tell the people of Northern Ireland through the House when his security review will be completed and when he


will be in a position to make a statement concerning definite action that will take care of terrorism in Northern Ireland?

Mr. Rees: With regard to the Provisional IRA and its announcements, it glories in what it is doing, which is an attempt to bomb political action oft the table. It may be an attempt to bomb iself to the conference table. That is not on, and it is vital that the people in the community should face the facts. Perhaps it is easy for us here but there should be no sign of giving in to the Provisional IRA. In that respect I am heartened by a statement made today by a councillor of the SDLP in Derry. The majority of Catholics do not support the hatefulness that leads to the bombing.
There are a number of steps which need to take place before ratification of the Sunningdale agreement. I will inform the House before any such steps are taken.
It is better that I simply say that I am sad about what has happened to the schoolteacher who was killed. I would need fuller information before reporting to the House. I want to get one thing clear about the short-term and long-term security review which I ordered when I first took this job. The long-term purpose is to look at overall policy —the relationship between the troops and the RUC, and to examine the rôole of the Army. We have been in this situation for four or five years and it is important to assess again what is the rôole of the security forces. The short-term steps which we have to take to respond to the changing pattern of terrorism will not await that long-term review. The examination of the long-term rôole will take a number of weeks. Where security does not enter into matters I will inform the House about our results.

Mr. Pym: The Secretary of State has made a very grave statement. It may well increase the sense of anxiety in the House but at the same time it ought to have increased the sense of determination and resolution to root out violence from wherever it may come. Do not the new ventures which the Secretary of State has described underline the importance of increasing the size of the Royal Ulster Constabulary? Are not the new measures of which he spoke in the debate last week

of critical importance in view of the need to have the maximum degree of involvement by the people in Northern Ireland? Since so many more young people have been involved, will the right hon. Gentleman say to what extent he can urgently involve teachers, parents and any other organisations or groups of willing citizens in Northern Ireland in sharing with him the solution of this extremely serious aspect? The right hon. Gentleman mentioned the security review which he has in hand. In view of the scale of the violence now taking place, is it not now extremely urgent? Should he not hurry on with that review, because, even though young people are involved, the security forces still have a prominent and preeminent rôle to play there and time is not on our side?

Mr. Rees: I am aware of the urgency of this. The right hon. Gentleman will know that it is the security forces which are carrying out this review. It has to be got right and does not lend itself to speed. It is not a matter of having more meetings to get a report by next Tuesday; it is a matter of looking at our rôle in Northern Ireland from the military angle as well as the political angle. The new measures are not features that can be dealt with by soldiers with guns. It is impossible to do it that way unless anyone is prepared to recommend that children, however hatefully they are behaving, should be dealt with by the bullet. That is not the way to do it, and that is what the IRA shelters behind.
The right hon. Gentleman knows that the school teachers, parents,—whom one meets—and the Churches are helpful. This has to be seen against the sociological background of certain areas, Belfast in particular, where the influence of teachers is not very great.

Mr. John Mendelson: Is my right hon. Friend aware that, while there is, and will continue to be, widespread support for his generally even-handed policy in opposition to violence and terror from all sides, there is also among some people a great concern that at a time when my right hon. Friend has held out some hope of political involvement by some of the extremist groups the IRA should have proceeded to this cowardly offensive against the economic life of Northern Ireland? Will he accept that many of those who support his general policy will


not accept that the chairman of the political wing of the IRA can give interviews in which he completely disclaims any responsibility for the terrorist policy and pretends that the two are different movementsc which can be divided? Will he also accept that in view of his staunch support for the Sunningdale agreement the Government now have a perfect right to get in touch with the Government in Dublin and to expect that they should take more risks in fighting terrorism jointly with the Government of the United Kingdom?

Mr. Rees: I am grateful to my hon. Friend for his initial remarks. He is absolutely right in analysing the attitude of the Provisional IRA. There are those who on the one hand pretend to be political while nevertheless engaging in this sort of terrorism. I am aware of that. I am clear on one thing. We still have to put our mind to dealing with those people who want to act politically. That must be the overall aim while dealing with the security matters.
In the relatively short time that I have been in this job I have found the southern Government extremely helpful, not only on the border, within their own resources, but in dealing with the flow of arms. It is an extremely difficult task. I can only report that the Government of the South have told us that they very much want to be helpful. There is much that they and we have to do.

Mr. Russell Johnston: Is the right hon. Gentleman aware that these seemingly unending bestial acts of violence leave a great many people in the House and in the country with a feeling of helplessness about what can be done or advocated in a constructive way? The right hon. Member for Cambridgeshire (Mr. Pym) has referred to the co-operation of the public and the Minister said that we cannot cope with guerrilla organisations of this kind by arms alone. Is the Minister able to say that the extent of public co-operation with the security forces in Northern Ireland is increasing? Can he say anything about what progress the security forces have made in preventing what must be a regular flow of arms to the terrorists? Are the security forces making any progress in that regard?

Mr. Rees: I agree with what the hon. Member has said about the feeling of helplessness. It is matched by a feeling of great anger among the people who live where it happens. This is perfectly understandable. We have to find means of enabling the public to play their part. It is much better, and the parties in the Executive are aware of this, to do it through the authorised organisations like the RUC reserve and the UDR. It would lead to possible conflagration if people took the law into their own hands. It is very difficult for me to say whether the situation is improving over the years. The political situation has to be taken into account. All I can report is that I have increasingly found over the last fortnight that I am getting letters from all parts of the community saying "We want to help". I offer to the hon. Gentleman the statement by the Executive, which is made up from the three parties in the Assembly. It was made in a forthright way.

Mr. James Johnson: Bearing in mind what my right hon. Friend's predecessor in office has said about the need to unite the people of Northern Ireland, may I ask my right hon. Friend why he has to say, if two persons are killed, that they are Catholic? Does he not think that this terminology leads to a polarising of opinion, which is the last thing we want? We want to unite our people, not separate them.

Mr. Rees: I used the word "Protestant" today just to put in perspective the mood of some people that it was only Catholics who were involved in the problems over the last couple of days. While as a norm I use "majority" and "minority" we have to face up to the words used in the community. Whatever the feelings might be here, when we do not care what a person's religion is, it is sometimes important for me to isolate this for purposes of public presentation.

Mr. Harry West: Is the Secretary of State aware of the callous murder that we have learned of this morning of Lt.-Col. Saunderson, a close personal friend and a constituent of mine, a man who served his country in peace and war? He was murdered in a building full of schoolchildren within a few miles of the border. Is it not high time that security on the


border was strengthened here? Is not the right hon. Gentleman now satisfied that, as we have told him so often, the border is wide open for any terrorists, arms, explosives and all the rest of it to come across, and that there is absolutely no protection? I plead with him and the House to ensure that adequate protection is given to people living in that part of the United Kingdom.

Mr. Rees: I agree with the hon. Gentleman that the death of his friend in a school building illustrates the nature of what is going on in Northern Ireland. He above all will know that what is happening is terrible.
One of the subjects that the security review must consider is the border. I told the right hon. Member in Belfast that I did not think it right that trained soldiers should be searching people going into the Segment. It is not the job of soldiers to do that. What we are looking at is the rôle of soldiers and whether they should be in a static position or whether they would not be better in a more mobile situation and nearer the border.
The Taoiseach and the Irish Foreign Minister met my right hon. Friend the Prime Minister and me recently. They have expressed concern about the situation, and have taken certain steps. We want to do far more in this respect. However, I put one point to the hon. Gentleman. He does not know, and neither do I know yet—maybe I shall not have this information—where the gunman came from. The fact that the murder was near the border does not necessarily mean that the gunman came from over the border. This is one of the difficulties of movement of people within the Province.

Mr. George Lawson: My right hon. Friend made the point that the Provisional IRA appeared to glory in what it was doing. Will my right hon. Friend consider the methods that he and the Opposition have been using in giving maximum and detailed publicity to all that happens? Does not my right hon. Friend consider that this type of violence might feed on and grow on what it is being fed? Will he not consider for a time adopting a policy of ensuring that the Press, radio and television adopt the policy of trying to ensure that nothing but the barest of detail is given about what happens? We all know that many people

glory in appearing on television. Will not my right hon. Friend try the effect of damping down, as far as he possibly can, every possible incident?

Mr. Rees: That is a difference between, say, the last war and this guerrilla warfare. There was a Ministry of Information to speak on the radio—there was no television in those days. I ask my hon. Friend to consider whether, even if we had the power, we should act like that in Northern Ireland. Let him consider what rumours would spread around Northern Ireland, what rumours would be afoot in the House, if there were not the fullest of information. That is the other side of the medal.
I remember one occasion when I was in Opposition when there was an incident—it does not matter what it was now—that was reported on the radio news every half an hour, all day, between pop programmes and so on. That sort of thing tends to build up feeling. I can only hope that the media take account of that. Of course I will listen to what my hon. Friend says, but this is a problem of guerrilla warfare in what are called normal times.

Mr. Biggs-Davison: Was not the only chance for the Sunningdale agreement that it should lead to peace? Is it not now the last hope for Sunningdale that from the South we should get real co-operation, leading to the apprehension of fugitive criminals, whether by extradition or by other means, and a concerted all-out effort against terrorism, which is the enemy of both the Governments in Ireland?

Mr. Rees: It is absolutely right that an all-Ireland effort is needed, but in the last five weeks I have learned that the major effort has got to be made in the North. We have just heard my hon. Friend the Member for Motherwell (Mr. Lawson) mention publicity. There are those here who have political disagreements with Sunningdale. Of course we accept that. But whenever it is mooted abroad that Sunningdale or the political development is in doubt, these are the very words that the IRA wants to hear because that is what it is trying to end. I again declare that the attitude of the House is that Sunningdale and all that goes with it, which we strongly support, is up for political discussion. That is fine. However, I


would not be prepared to give in politically to men of violence. That would be an open door to many terrible things, and more terrible things could happen if it broke down.

Mr. Duffy: Far from Sunningdale being irrelevant, as was asserted by the hon. Member for Antrim, North (Rev. Ian Paisley), will the Secretary of State for Northern Ireland now confirm that it is the only constructive way out of the present darkness, that it is threatened by activity on both sides of the community in Northern Ireland, and that it is, therefore, incumbent on those in Northern Ireland as well as in the House who subscribed to it to put their heads down now and push ahead with its implementation?

Mr. Rees: I say to my hon. Friend, as I said the first day I was in Northern Ireland and have said since in the House, that the Sunningdale agreement, which we inherited from the previous administration, is the best approach to try to bring together the two parts of Ireland and the two communities. We support the agreement. There are still steps to be taken in carrying out the Sunningdale agreement, steps that we have already mentioned.

Mr. McCusker: Will the right hon. Gentleman convey the gratitude of myself and the people of Armagh to the two hon. Gentlemen on the benches opposite who found the time to come to see the £3 million damage caused by the Irish Republican Army? Does he accept that there was a lot of anger and frustration that neither he nor the Minister of State, nor anyone else from his office, was able to come along as well? Bearing in mind what he said about allowing people to see that they are winning, will he expedite the rebuilding of the centre of Armagh, remembering that over 100 jobs were lost and also that some claims for criminal damages have been outstanding for two years?

Mr. Rees: Rebuilding is vitally necessary, and I shall look at my responsibilities, as I am sure the Executive will look at its. The hon. Gentleman praised those of my hon. Friends who visited Northern Ireland, and I am glad that they did so. My hon. Friend the Minister

of State and I, at two ends of an aeroplane, as it were, and with all the work that there is to do, go out and look, but the fact that we do not look at everything is not a sign that we are not concerned. It would lead to our not going anywhere, in case everybody expected us to visit everything that happened. I assure the hon. Gentleman that the fact that I was not at Armagh with my hon. Friend who was in Northern Ireland yesterday is not a sign of not caring. There are jobs to do.

BUILDING SOCIETIES

The Secretary of State for the Environment (Mr. Anthony Crosland): With permission, Mr. Speaker, I will make a statement about the recent discussions between the Government and the building societies.
The Government's immediate objective is to increase the flow of funds available for mortgage lending, while holding the mortgage rate at its present level. The building societies, on the other hand, have argued in recent days that a sufficient net inflow of new savings cannot be assured except by an increase in the mortgage rate to above, and probably significantly above, the present 11 per cent.
In order to avoid this further damaging increase in housing costs, while yet making more money available for house purchase, the Government have offered to arrange immediate short-term loan facilities for building societies of up to £100 million at a rate of 10½, per cent. The Bank of England would make advances at the minimum lending rate, which is currently 12¼ per cent. The cost of meeting the difference—about £150,000 per month at present rates—would be met from my Department's Vote subject to Parliament's approval. We also undertook to arrange for a further £400 million to be available from the end of April, if circumstances then still required this, at an average rate of £100 million a month.
This initiative would, in the Government's view, meet the immediate major problem. It would help the societies to lend more money quickly for house purchase without imposing further financial burdens on home owners and home


buyers. The Government also believe that the present difficulties of the societies in attracting an adequate supply of funds will diminish as we succeed in our intention of reducing the level of interest rates generally.
The Council of the Building Societies Association considered these proposals at a meeting yesterday afternoon. It was not able to agree to accept them without a further discussion with the Government. I have therefore agreed to meet the association's representatives once again at five o'clock this afternoon.
Our proposals will, I believe, make a significant contribution towards stabilising both the cost and the flow of mortgage funds. I hope and expect, therefore, that following our further discussion with the association's representatives, the council will decide at its next meeting on 19th April to accept the Government's proposals and to recommend no increase in the mortgage rate.

Mrs. Thatcher: I am grateful to the right hon. Gentleman for carrying out his undertaking to make a statement to the House at the earliest opportunity. Does the right hon. Gentleman recollect that when my Government, about a year ago, announced a modest measure to help the house buyer, he and his right hon. Friends denounced it in no uncertain terms as a panic measure, as an expedient to carry the Government over the period of the county council elections, and as a step that made nonsense of the monetary policy announced in the Budget speech?
But I shall be kinder to the right hon. Gentleman. Is he aware that we accept that unless interest rates fall as far as the Chancellor of the Duchy of Lancaster hopes—although I notice that they are rising on the other side of the Atlantic—some action should be taken to increase the flow of money available to the house buyer at a reasonable price? May I therefore, against that background, ask the right hon. Gentleman for answers to a few points?
First, why do the Government not allow the building societies to pay to the small saver the same rate for his money as they —that is the Government—are willing to pay for the money that they need? That would surely be the way to retain the deposits with the building societies.
Secondly, in case the right hon. Gentleman should attempt to answer that by reference to the mortgage rate—and I am sure that he is concerned about that—may I ask why, as recently as a fortnight ago in the Budget, the Government made it more difficult for the building societies to keep the mortgage rate down by increasing the composite rate of tax which the building societies have to pay on behalf of the lender?
Thirdly, when are the loans repayable, and upon what terms would the second £400 million be lent? There was nothing about that in the right hon. Gentleman's statement. Assuming that the whole £500 million is taken up and not repaid this year, what, on the ordinary Treasury conventions, would be the change in public expenditure and the change in the net borrowing requirement in the current year?
Finally, will the Government please give an assurance that they will not place constraints on the societies as a condition of the loan that would prevent them from adapting their interest rate structures and their methods of operation to the conditions of a changing world? We agree that they would need to adapt. We believe that they should be free to do so.

Mr. Crosland: I add that up as being seven separate questions. I shall be as brief as I can in replying
First, on the question of the famous £15 million of almost exactly a year ago today, I withdraw nothing of what I said in criticism of that proposal. Compared with what we are proposing, it was non-repayable; it was far more costly to public funds; it was indiscriminate and, incidentally, it failed totally in its purpose at the end of the day. It failed entirely in its purpose, because the object, as the right hon. and learned Member for Hexham (Mr. Rippon) would agree if he were here, was to prevent a rise in the mortgage rate to 11 per cent., and that rise occurred within three months of the £15 million subsidy.
Secondly, it is undesirable to increase the investment rate because this would involve increasing the mortgage rate.
Thirdly, the right hon. Lady asked what was the effect of the Budget. She picked out only one of a number of


Budget measures which affect the building societies. For example, she made no reference to our action on annuity bonds. She made no reference to the effect on building society inflow of the reduction of bank interest on loans and to other features of the Budget which help the building societies.
Whether the effect of the Budget on balance was favourable or unfavourable is a matter of a great deal of argument, certainly between the Government and the building societies, and even more generally than that. But no one can say that the Budget did the societies a great deal of harm.
Fourthly, on the question of repayment, the broad position is that the building societies will repay this money, either as a change in the interest rate position increases the net inflow or as other sources of borrowing are found. I propose to discuss with them this afternoon in detail the precise arrangements for repayment.
Fifthly, the terms of lending of the next £400 million will be discussed in the light of the interest rate position at the time. I hope that this further £400 million will not be required. I hope that before then we shall have found new sources of borrowing or that the interest rate position will have moved strongly in favour of the building societies.
Sixthly, I was asked about public expenditure. The facility arranged through the Bank of England will not add to public expenditure or to the public sector borrowing requirement. The facility would be made available by the Bank of England banking department, which is, of course, part of the banking sector and not part of the public sector. The only addition to public expenditure would be the—if I may use the word—trivial sum of £150,000 a month to cover the interest rate differential.
Finally, will we constrain the building societies from adapting their interest rate policies to changing conditions? Indeed, far from it. We believe that a great deal of adaptation is needed.

Mr. Walter Johnson: Is my right hon. Friend aware that the hedging by the building societies on this extremely generous offer by the Government will be seen

by the 4½ million people buying their own homes as symptomatic of the behaviour of the movement which has been responsible for the situation we face at the present time?
Furthermore, will my right hon. Friend take account of the plea that I have been making in the House for the past two and a half years to refer the activities of the building societies to an independent inquiry? Why are there over 100 building societies supposedly in competition with each other, sometimes 10 in one street, all charging the same rate? Why should not the building societies in good times make provision through their own stabilisation fund?

Mr. Crosland: As regards the question whether the building societies have been hedging, as I am about to meet them in one hour's time I prefer not to comment at this stage.
Regarding the second and third questions, I would like to make it clear to my hon. Friend—I know his views in this matter—that what I am discussing this afternoon and, indeed, will be discussing with the building societies, is basically a holding operating relating to an immediate crisis and an immediate threat. My hon. Friend is aware that in opposition I was strongly critical of the methods that we have in this country both of raising and of lending funds for private house purchase. I was a strong supporter of the idea of a stabilisation fund—incidentally, this is a move in that direction—but what I am proposing to the building societies in these discussions does not rule out—far from it—the necessity for a long, hard look at the question of finance for private house purchase.

Mr. Tyler: Is the right hon. Gentleman aware that we on this bench are genuinely grateful to him for coming to the House before the recess to make this statement? We are aware of the dilemma which he faces and have great sympathy with him in this situation.
Is the right hon. Gentleman also aware, however, that we are anxious that he should attach strings? There has been criticism in advance of this statement that he was, apparently, prepared to attach strings to a subsidy of this kind. We on this bench at least wish him well in this respect. We recognise that last year's


£15 million went down the drain and we do not want that to happen again.
However, will the Secretary of State confirm that now is the time to exercise some influence over the building societies' lending policies? He will recall that we have suggested over the years that equity mortgage schemes, index-linked schemes and low-start mortgage schemes should be used. Is it not true that as a representative of one of the minority parties in the House, some attention should be given to the views of the absent Members—

Mr. Speaker: Order. I must remind the House that the Secretary of State has an engagement at five o'clock. That really is enough!

Mr. Crosland: If I may say so, Mr. Speaker, your courtesy and consideration grow year by year. I am much obliged for this novel form of protection from over-lengthy questions. I am grateful to the hon. Gentleman for his sympathy and I shall be brief in answering.
I must make it clear that the one string, if that word is to be used, that is attached to this as the string that matters is that, if the building societies accept this offer, the mortgage rate is held at 11 per cent. If the mortgage rate is not held at 11 per cent., then the deal is off—just like that.
The other questions that the hon. Gentleman raised, indexation and the rest, are matters for longer-term study.

Mr. Frank Allaun: If the building societies prove obstructive despite this further massive subsidy, because such it is, will the Secretary of State lend instead to the local authorities? They make 100 per cent. loans, often to people who cannot obtain them from building societies. Secondly, is my right hon. Friend aware that many of us feel that these funds should be provided by the big four banks out of the £640 million profit they have made; and, if they cannot be provided out of those profits, they should be provided, at low interest rates, out of the banks' vast resources.

Mr. Crosland: If the building societies at their meeting on 19th April were to reject this offer, it is clear, to put it moderately, that the atmosphere would be somewhat darkened and relations

between the Government and building societies would be somewhat strained. I am putting this very moderately indeed. Nobody could possibly suppose that relations will not be influenced between the Government and the building societies movement if the societies were to turn down an offer of £500 million.
As to local authority mortgage lending, I am aware of the point. The local authorities are not, in fact, in the same situation as the building societies, either on the borrowing side or lending side. But we have my hon. Friend's point in mind. I take my hon. Friend's point about bank profits, but we wanted to find the money from the source from which it was most easily and quickly available.

Mr. Ridley: While any relief for house purchasers' mortgage interest payments will be welcomed, can the right hon. Gentleman say what effect the £500 million, if it is all taken up, would have upon the money supply? Will he also say whether this would not result in a further increase in inflation, particularly of house prices?

Mr. Crosland: No, I would judge not. I would judge that the sort of figure we are discussing, say £100 million per month —hopefully not required for the whole of the five to six months period—is a rate of additional lending sufficient to stem the recent net outflow from the societies, and also to increase by a reasonable amount the funds available for new house purchase. But it is not a sum such that it would be likely to recreate the appalling inflation of house prices that was created by the gross overlending of 1971 and 1972.

Mr. Cant: As the House is aware, the societies are bound to be influenced by the strong attitude adopted by my right hon. Friend. Will he, therefore, make the point to them that, if they accept this £400 million or £500 million over the suggested period, they lend it to people who are purchasing houses for the first time, and only to people purchasing houses for, say, less than £10,000 to £12,000?
May I also make the point that it would greatly help the supply of funds to building societies—a short-term, temporary measure—if my right hon. Friend would raise the amount from £10,000 to £25,000 on which banks are allowed only to pay


91½ per cent. gross? Would lie also review local authority practices regarding high interest rates with yearling bonds?

Mr. Crosland: I should like to consider all my hon. Friend's points. I would, however, stress that this has had to be a rapid holding operation with two essential objectives. The first is to get private house building off the ground, and the second is to give immediate relief to home owners and buyers threatened by perhaps 12 per cent. and quite probably 13 per cent. as a mortgage rate. Many of my hon. Friend's points will be looked at in the longer-term review.

Mr. Tugendhat: Is the right hon. Gentleman aware that the whole country will wish the Government well in their efforts to bring down interest rates? However, in the light of what is happening on the other side of the Atlantic, and in the light of the extreme dependence of the sterling exchange rate on attracting money into the country, it is doubtful whether the Government will succeed in doing so. In the circumstances, would it not be better to devise a subsidy system that at least enabled the building societies to offer to investors a rate which would enable them to withstand any adverse trends in interest rates?

Mr. Crosland: I hesitate to contradict anything that hon. Gentleman says, as he wrote an extremely perceptive review in the Financial Times of a book which I recently published
Regarding the behaviour of interest rates, we have seen encouraging signs in this country in recent days—the release of special deposits by the Bank of England last week, the reduction in the minimum lending rate from 12½ per cent. to 12½ per cent., and, I was glad to note, the announcement by the National Westminster Bank this morning that it would reduce its base rate by ½ per cent.
It is true that we are acting on the supposition that we shall be successful in bringing interest rates down. If we are proved to be wrong, or if we are unable to find new sources of borrowing for the building societies, it is clear that the entire question of the flow of mortgage lending will have to be reopened.

Dr. M. S. Miller: Is my right hon. Friend aware that the building societies' lukewarm attitude to the Government's prompt and generous offer is also an indication of their not facing up to their responsibilities to the millions who are in difficulties at present? Is this not the time for the Government to look again at the building societies' set-up, since the words themselves are misnomers? The societies build nothing. They are money-lending agencies whose function could well be performed by other agencies. I would ask him to take up the point made by my hon. Friend the Member for Salford, East (Mr. Allaun), that local authorities could disperse money in a much more even-handed and equitable way, and more cheaply than can the building societies.

Mr. Crosland: I do not think that the building societies deserve quite the strictures which my hon. Friend has applied to them. We are not discussing the long-term future of the supply of funds for private house purchase at this juncture. We are discussing a holding operation to get more money quickly into house purchase and to hold the mortgage rate at 11 per cent.

Mr. Allason: Does the right hon. Gentleman agree that 11 per cent. is much too high for existing borrowers and creates intolerable problems for them, and, equally, that 11 per cent. is too low for lenders and he is therefore having to come to their rescue? Why has the right hon. Gentleman chosen 11 per cent.? Why not go back to 91½ per cent., which was the figure which the previous Government attempted to adopt as a holding operation? The Minister is now doing a holding operation ½ per cent. higher. Will the right hon. Gentleman accept my congratulations on his efforts, particularly as I am the only backbench Member who congratulated the previous Government on their holding operation?

Mr. Crosland: I should like, if I may, in return to congratulate the hon. Gentleman on his audacity. We inherited a rate that went up from 8½ per cent. to 11 per cent. and which threatened to rise to 12½ per cent. or 13 per cent., and it may be taken as a reasonably successful first measure to hold it to 11 per cent. No


doubt further successful operations will be carried out by the Government as the years unfold.

Mr. Spriggs: Is my right hon. Friend aware of the extent of the serious poverty created in many families as a result of increased mortgage rates over the years? Is he aware of the large numbers of people who, having started to buy their homes, are having to sell them because they can no longer meet the repayments?

Mr. Crosland: Yes, Sir, I am aware of that and also of the acute hardship that has been caused to those who bought at the inflated prices two or three years ago and found the rate increasing inexorably step by step from 81½ per cent. to 11 per cent.

Sir Harmar Nicholls: Ought it not to be remembered, on behalf of the building societies, that they want to find an answer to this question, and that while the Minister can talk about a holding operation they have to sign the deed and be responsible for the contract that follows? The House of Commons ought not to ignore the strings. To ask building societies to guarantee their position at 11 per cent. when they do not know all the circumstances that will surround the money market is perhaps asking them to commit themselves too deeply.
The right hon. Gentleman also said that if the building societies take up his offer of an additional £400 million, when it is adjudged that circumstances have been reached when it can he repaid, it will have to be repaid. Who will decide when those circumstances have arrived? Will they be mutually agreed before the money can be withdrawn, or will the Minister retain the right to decide when circumstances are such that it ought to be repaid? If it is a one-sided arrangement, I can well understand the reluctance of the building societies to commit themselves to long-term lending with the short-term money that may come from the Government

Mr. Crosland: I shall be very surprised if, at the meeting at five o'clock, we do not reach complete agreement on the terms of the repayment. I am speaking in advance, but I do not expect any difficulty.
As to the 11 per cent., I must make it clear that we cannot exact from the building societies a guarantee that they will permanently keep their rate of interest at a certain figure. Obviously, all that we can say is that if they wish to have this £500 million they must hold the rate at 11 per cent.

Mr. Ashton: Is my right hon. Friend the Secretary of State aware that over the last few years insurance companies and pension funds have ploughed about £3,000 million into property building, most of which has gone to finance useless empty office blocks and empty renewed city centres? Can my right hon. Friend not take specific measures to insist that these holders of large funds plough their money into building societies to help to build more houses for ordinary people?

Mr. Crosland: I am very much aware of the point that my hon. Friend makes —indeed I made it with him when in Opposition—but that is part of the longer-term study, a major portion of which will be the examination of possible alternative sources of funds for the building societies.

Mr. Emery: Will the right hon. Gentleman take into account the fact that the building societies expect to have a net outflow of about £15 million this month? As their requirements are about £160 million, that means that they will be meeting only about 50 per cent. of their requirements. Unless they raise their 7½ per cent. saving rate, they argue that they will not be able to meet even the short-term requirement which the hon. Gentleman suggests the loan will go to meet. Why, therefore, does he want to restrict their saving rate to 7½ per cent. when the building societies feel it is essential, in order to attract money, that they should put up that rate?

Mr. Crosland: For the very simple reason that if they put up their investment rate they would be bound also to raise their mortgage rate well above 11 per cent., unless the Government were to step in with an indiscriminate and wasteful flat-rate subsidy, or a reduction in taxation, which amounts to the same thing. We strongly criticised that method of doing it a year ago, and we have not changed our minds.

EARLY-DAY MOTIONS

Mr. Speaker: I shall now rule on a matter raised by the hon. Member for Tiverton (Mr. Maxwell-Hyslop) on Monday and yesterday.
I should perhaps first dispose of the hon. Member's suggestion that I ought to have made a formal ruling yesterday. When the matter was raised by the hon. Member on Monday, I said,
I shall consider the hon. Member's point and if necessary communicate with him further."—[OFFICIAL REPORT, 8th April 1974; Vol. 872, c. 44.]
I did not on reflection consider that any such communication was in fact necessary. The practice of ruling after 24 hours, to which the hon. Member referred yesterday, relates solely to matters of privilege, of which this is not one. It was, therefore, in no way incumbent upon me to give a ruling yesterday

Turning to the substance of the matter, I will read again the passage from Erskine May which I read on Monday:
He"—

that is Mr. Speaker—
has also directed that a notice of motion should not be printed, as being obviously not a proper subject for debate, being tendered in a spirit of mockery, or being designed merely to give annoyance or as irregular.
In this case, the hon. Member's motion suggested that a letter from the Prime Minister should be examined by the police to ascertain whether it was" authentic, or another embarrassing forgery". The letter was from 10 Downing Street on 4th April:

"Dear Mr. Maxwell-Hyslop,

Thank you for your letter of 26th March.

It is clear from a study of the Debate on 25th March, and the cutting enclosed with your letter, that there was a genuine misunderstanding about the point that Michael Meacher was making. His intention was, as was made clear in the House, to refer to the new rate rebate scheme, but he appreciates that the words he used were ambiguous and has asked me to convey his apologies for this.

Yours sincerely,

Harold Wilson."

In my view, the hon. Member's motion fell within each of the first three categories I have stated above—not being a proper subject for debate, being tendered in a spirit of mockery, and being designed merely to give annoyance. Therefore,

ipso facto it was a motion of extreme irregularity. In my view, the Clerk at the Table was right to withhold the motion from the printer.

But may I explain, as this is a new House of Commons, the custom in these matters. If the Clerk decides that a motion or Question should be withheld, he informs the Member concerned. If the Member does not accept that view, he should ask for the matter to be referred to me. If I decide to uphold the view of the Clerk at the Table, the Member is informed, and if the Member is still dissatisfied he can come and see me to argue his case further. If, at the end of this process, he is still dissatisfied, he can raise the matter in the House, and if he disagrees with my ruling he can challenge it according to our procedures—in other words, by a motion.

The object of this procedure is to save the time of the House. I regret that it was not followed in this case.

Mr. Maxwell-Hyslop: Further to that point of order, Mr. Speaker. The issue of principle is whether a Clerk, without reference to the Speaker, can reject a motion tabled by a Member without any explanation why he judges it to be out of order. It is something that can affect every Member of the House. In this case, Mr. Speaker, no explanation was given by the Clerk why he rejected my motion. Erskine May states quite clearly on that point,
If the irregularity is not extreme, the notice is printed, and reserved for future consideration.
Since the Clerk gave no evidence to support a view that the motion contained an extreme irregularity, he had neither the power nor the right to suppress it. The issue of detail, Mr. Speaker, is this: were there valid reasons justifying the Clerk at the Table in rejecting the motion on presentation of those valid reasons to the Member concerned, which he did not do?
You have read out, Mr. Speaker, the later extract from Erskine May and your ruling is that each of those grounds applies to the motion that I submitted. I submit to you that that is not the case for the following reasons. First, the statement—

Mr. Speaker: Order. If the hon. Member is contesting my ruling, he may


not do it in this way; he must do it by motion.

Mr. Maxwell-Hyslop: Further to that point of order, Mr. Speaker. This is the first moment that I have learned either from you or from any Clerk of the House the grounds on which it was claimed that this motion could not be accepted. If you refuse to allow me the opportunity of suggesting why you should reconsider your ruling after the first time you have given me the reasons why the Clerk originally made it, of course you will leave me only the alternative of a substantive motion on the matter.

Mr. Speaker: I am not at all afraid of being threatened in that way. In fact, it was suggested to the hon. Member that he should come and discuss the matter with me, according to the practice that I have laid down. That has applied in very many instances. It saves a great deal of the time of the House, when the Clerk withholds a motion, and the hon. Member concerned objects, if the hon. Member is advised to come and see Mr. Speaker about it. I should then gladly have discussed the matter, listened to the hon. Member's arguments, and perhaps ruled differently. As the hon. Member did not accept the custom of the House on this matter, I cannot allow it to be argued further today.

Mr. Maxwell-Hyslop: On a different point, Mr. Speaker. It is a matter of great importance that Clerks of the House should not arbitrarily withhold from Members the right to table motions, giving no reason for so doing. This is a sufficiently important matter for it to be raised and dealt with on the Floor of the House rather than in camera, because it affects the right of every Member irrespective of the merit of the motion
If the Clerk concerned had sent to me the reasons why he rejected the motion, the course of action which you state would have been appropriate, Mr. Speaker. He did not do so. It was rejected without any explanation whatsoever. This is the first occasion—[Interruption.]—the Patronage Secretary is not dispensing patronage at the moment; nor is he in Mr. Speaker's Chair; he is merely interrupting a point of order from a sedentary position, and he should know better.
I suggest to you, Mr. Speaker, that you should instruct the Clerks that if they wish to follow the procedure of rejecting a motion which has already been accepted by the Table Office, they should, without exception, communicate to the Member concerned their reason for doing so when they have not consulted you on the matter, as in this case. There are substantial grounds—

Mr. Speaker: Order. I do not think that I can let the hon. Member go much further. I take his point and I am perfectly certain that the Clerks at the Table have done so. I have given the reasons why I did not think that this motion should be sent to the printer. I am not trying to be at all personally offensive, but I think that Clerks give hon. Members credit for a little common sense. They probably thought that the hon. Member's motion was an attempt at a joke, and a fairly obvious one at that.

Mr. Arthur Lewis: On a point of order, Mr. Speaker. As one who has on many occasions approached the Clerks at the Table and at all times found them most courteous and helpful, may I say that it has been my knowledge for almost 30 years that when the Table Office said that in its opinion a matter was out of order and that I had the right to go to Mr. Speaker, Mr. Speaker would invariably immediately arrange a discussion on the matter
Therefore, I cannot see that it matters whether I am told the reason by the Clerks at the Table. They invariably give the reason, but whether they do or not, the fact is that I may see, and have on occasions been to see, Mr. Speaker to discuss the matter with him, and invariably he has helped me, with the aid of the Clerk, to get the sort of motion that I want on the Order Paper. If an hon. Member wants help to get a difficult motion on the Order Paper, he should work with the Clerks and with Mr. Speaker, and they will get a difficult motion on the Order Paper.

Mr. Speaker: This is all very interesting. I am grateful.

Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker.

Mr. Speaker: Order. I have asked the hon. Gentleman to conclude the matter. I think that he has had his say.

Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. Merely as a courtesy, I beg to ask leave to give notice that I shall raise this matter on a substantive motion

LONDON BOROUGH COUNCIL ELECTIONS

Mr. James Wellbeloved: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, to debate a specific matter of urgent public importance; namely,
the threatened breakdown of arrangements for the holding of a poll on Thursday 2nd May 1974 for the election of councillors to serve on certain London borough councils.
It is a matter of a specific nature because, due to the threatened action by the National Association of Local Government Officers in my borough and in other boroughs within Greater London, there will be a failure to conform to the law over the issue by the returning officer of poll cards, and there is a possibility that there may not be available presiding officers and poll clerks to operate polling stations for the local authority elections.
Even an experienced returning officer, such as we have in the London borough of Bexley, with a proven record of efficiency and impartiality in these matters, will find it difficult to discharge his statutory duties if these things come to pass.
The matter is urgent because the House will be rising this week and will not be returning until 29th April, which is but three days before the poll is due to be held for the election of councillors to the 32 London boroughs.
It is a matter of serious public importance because democracy itself is liable to be put to severe test if the new London authorities are not elected as required by law on 2nd May.
It is also a matter of serious public importance because, if for any reason the poll has to be abandoned in any borough or in any ward in any borough, there is no clear procedure for the carrying on of good government in London boroughs if a local authority is not elected
The law passed by this House requires the elections to be held on 2nd May.

I have not yet been able to find a Department or one of Her Majesty's Ministers who can accept ministerial responsibility, but surely in the end it must be a matter for this House to take notice of this serious situation.
I hope therefore, Mr. Speaker, that, in view of the serious and urgent nature of this request, you will give consideration to allowing it to have precedence over the Orders of the Day.

Mr. Speaker: The hon. Gentleman has certainly raised an important point and I am grateful for the way that he has put it. There are difficulties in allowing a debate under Standing Order No. 9, and I am afraid that I cannot accede to the hon. Gentleman's application. But I very much hope that what he said will be noted.

BILLS PRESENTED

CHANNEL TUNNEL BILL

Mr. Secretary Crosland, supported by Mr. Secretary Callaghan, Mr. Secretary Jenkins, Mr. Secretary Varley, Mr. Joel Barnett, Mr. Fred Mulley and Mr. Neil Carmichael, presented a Bill to provide for the construction and operation of a railway tunnel system under the English Channel, together with associated works; to make provision for guaranteeing loans and for the expenditure necessary for and in connection with the construction and operation of that system and those works; to constitute a Board to participate in the operation of that system; to incorporate part of that system into the United Kingdom and to provide for the jurisdiction of courts in Great Britain over matters occurring in that system and trains proceeding through it; to provide controls in connection with passengers and goods passing through that system; to provide for the incidence and computation of tax in connection with the construction and operation of that system; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 27.]

RIGHTS OF PATIENTS BILL

Mrs. Joyce Butler, supported by Mr. Arthur Blenkinsop, Mr. Sydney Bidwell,


Mr. Loughlin. Miss Quennell, Dr. Winstanley, and Mr. Frederick Willey, presented a Bill to establish the rights of patients to privacy when receiving hospital treatment under the National Health Service, and in regard to medical experiments on human beings: And the same was read the First time; and ordered to be read a Second time upon Friday 10th May and to be printed [Bill 28].

MINES (WORKING FACILITIES AND SUPPORT) (AMENDMENT) BILL

Mr. Martin McLaren presented a Bill to amend the Mines (Working Facilities and Support) Act 1966: And the same was read the First time; and ordered to be read a Second time upon Friday 3rd May and to be printed. [Bill 29.]

BUSINESS OF THE HOUSE

Mr. Laurie Pavitt: I beg to move,
That if the National Insurance Bill be committed to a Committee of the whole house, further proceedings on the Bill shall stand postponed and that as soon as the Proceedings on any Resolution come to by the House on National Insurance [Money] have been concluded, this House will immediately resolve itself into a Committee on the Bill.

Sir Brandon Rhys Williams: Mr. Speaker, I wish to raise with you a matter of procedure. Yesterday I warned the Leader of the House that I wished to raise this point today. I am sorry that he has not chosen to be in his place.
I hope that the Government will not proceed with their intention to force the House to the great inconvenience of taking the remaining stages of this important Bill in the course of today. I appreciate that the reason given is that if the House of Commons does not complete all stages of the Bill today the pensioners will not receive their benefits on 22nd July.
That reason is totally unconvincing for two reasons. First, I do not think that anyone in the House supposes that the Department will refuse to start work on this necessary change until the Bill has passed through all its stages.
Secondly, the Government are not adopting this procedure in the other place. The House of Lords is sitting today. If it were so essential that the Bill should

go through to the statute book today, it should be possible for the other place to be asked to take it this evening, when we have done with it, and it could go for Royal Assent tomorrow.
On investigation I find that Second Reading in the Lords is not to be taken until after the Easter Recess, that the Committee stage should take place on 9th May, and that the Third Reading should be on 13th May. Therefore, in the other place this important Bill is to be treated with proper respect. However, in the Commons, for some reason that is not yet clear, we are to be asked possibly to sit late tonight to complete our examination of the Bill.
When I spoke to the Leader of the House yesterday he mentioned as a precedent the Pensioners' Payments and National Insurance Contributions Act 1973, which was taken through all its stages in one day by the previous Government. But that example should not have been used for this matter, because it was an Act of a totally different character. It was introduced to benefit fewer than 8,000 people. and the Money Resolution associated with it required the expenditure of only £75,000. What a contrast that is with this enormously important Bill which will bring benefit to millions of pensioners, somewhat less benefit to the unemployed, the disabled, and so on, but will also place a heavy burden on a large section of the population! It may force some people into changing their businesses and others into bankruptcy
I believe that the business of the House of Commons is to protect the taxpayer and the contributor by minutely examining the Government's proposals for expenditure. In examining the Government's proposals for expenditure, it may not necessarily he hostile, but when an amount of £1,100 million is involved, as with this Bill, it is wrong and a derogation from the rights of the House to expect us to deal with it in a few hours.
Moreover, from a back-bench Member's point of view, it is exceedingly inconvenient to be asked late last night to table Committee stage amendments before hearing what is to be said on Second Reading or being able to express our views. How can we have a valid


Committee stage when amendments have to be put down before we have heard the Secretary of State and before there have been any replies to our Second Reading points? It makes a mockery of Second Reading to use this procedure, it makes a mockery of the Committee stage, which will be artificial and truncated, and it makes a mockery of the House.
I hope that the right hon. Lady and others who are responsible for business on the Government Front Bench will recognise that what they are doing is entirely wrong, totally without precedent, and should be abandoned forthwith.
I hope that we may have reassurance on that point now and can proceed to Second Reading in a proper and orderly way.

The Secretary of State for Social Services (Mrs. Barbara Castle): I have considerable sympathy with the hon. Member for Kensington (Sir B. Rhys Williams). This is an unusual procedure. It certainly is not one that any Government wish to adopt in the normal way, but we are in an unusual situation
Rightly or wrongly—I think rightly—we have introduced this uprating on one of the most restricted timetables in the whole history of national insurance—I think in the shortest period that has ever been attempted. That has put burdens on many people. It has caused difficulties for my staff, as I have explained before, and I recognise that it puts us in the position of having to do some overtime tonight
Surely the hon. Member is not suggesting that we could not have a very good and adequate discussion on the various points of the Bill, or is his main complaint that we have to sit all night to do it—[Interruption.] That was one of his points. He said he thought it was wrong that we should have to sit all night in order to express our views. I am asking my staff to do an excessive amount of overtime to push this matter through and it is helpful and valuable to get the utmost clarity, not merely on Second Reading but in the views of the House on the details of the Bill. There is therefore good reason for pushing ahead with the Bill now before the Easter Recess.
The arrangement has not been imposed upon the House by the Government. There were discussions through the usual channels and I had intended to open my Second Reading speech by thanking the House, particularly the Opposition, for the co-operation shown in accepting this unusual procedure.
The hon. Member for Kensington tried to draw a distinction between the Tory Government's Christmas bonus Bill and the measure before us. I see no difference in principle. It is not as though the full details of the uprating were not known as long ago as 27th March when I spelt them out in a full and comprehensive statement which included a reference to the contribution rates. The House was well aware a considerable time ago of what would be in the Bill. When we were in Opposition we had many points we wanted to raise on the Christmas bonus legislation. There were many categories to whom we felt the Christmas bonus should have been paid. Nevertheless, we agreed to make our points more succinctly than would otherwise have been the case to enable the then Government to get their legislation in one day.
Of course, I can give the assurance that this will not be a regular occurrence. This is a one-off emergency which arises because we want to push the uprating through as soon as possible. We have asked for the co-operation of all hon. Members in that. That does not mean that they will not be free to move their amendments or put forward their views. On this occasion, however, we ask them to help us in getting the uprating through by 22nd July, a date I was originally told was impossible. I should have thought that all hon. Members would want to achieve that goal, and for that reason we should get on.
I have already warned hon. Members that we are taking a risk in fixing the date at 22nd July, the risk being that some pensioners might have to get their increases in arrears. We want to minimise that risk as much as possible. I am asking my staff to do overtime they do not want to do in order to keep the risk down. That was one of the reasons it was necessary to get as many stages as possible of the Bill completed before the Easter Recess.
I express my appreciation for the response we have had from the Opposition.


I had hoped that the assurance that this procedure will not be repeated by the Government would convince the House of our good intentions. I ask the House to accept that this is an exceptional situation and to help us to get the up-rating through in exceptionally quick time.

Sir B. Rhys Williams: I appreciate the Secretary of State's difficulties in this matter since the Leader of the House is the right person to deal with our queries. I am not sure whether the Secretary of State is entitled to speak on his behalf. Is she saying that the staff are not prepared to start work on the necessary changes to implement the higher scale of pensions until after the Bill is on the Statute Book? If that is her argument, why has there been no attempt to hurry the proceedings in the other place?
If it were necessary for us to complete all stages in this House this week, why could not we have taken the Second Reading on Monday, which would have given us yesterday to consider that debate and table our Committee points for discussion today? An attempt has been made to stifle debate on the Bill. The Secretary of State is making a mockery of the Committee stage and is handicapping back benchers. It makes no difference that she is hoping to get the new scales paid by 22nd July. That is weeks ahead and there would have been plenty of time for proper discussion of the minor aspects of the Bill after the holiday if the Secretary of State had not insisted on getting the measure through at a stroke.

Mr. E. Fernyhough: It seems necessary to remind Conservative Members how frequently discussion was curtailed in the last Parliament by use of the Guillotine. Clause after clause of important Bills went through without a word of discussion. It ill becomes hon. Members who supported that approach to moan and groan because we now want to speed up the payment of higher pensions to those in need.

Mr. Tom King: Is not the point here that my hon. Friend the Member for Kensington (Sir B. Rhys Williams) is seeking an explanation why this measure has to go through the House in all its stages today when it will not be finished in the House of Lords before

9th May? If I understand the Secretary of State correctly, she is saying that she accepts that all hon. Members wish the benefits under the Bill to be available at the earliest possible date. and that the most significant amendments are expected to be made in the House of Commons, which should be achieved before the holiday. She is saying that on that basis her staff will be able to progress that much further forward in preparing the necessary steps for implementation. Is she suggesting that she expects most of the amendments to be made here and that she is prepared to take the risk that another place will not do too much to change the plans that have already been made?

Mrs. Castle: The hon. Member for Kensington (Sir B. Rhys Williams) must realise that this week's business has been arranged through the usual channels. Today's business was agreed. I recognise that back benchers have their rights and freedom and their different and independent views. In my time as a back bencher I have had a few independent views. I should have thought that both the hon. Member for Kensington and the hon. Member for Bridgwater (Mr. King) appreciated that the process of implementation of an uprating has a number of stages, some starting as soon as the announcement is made, others depending upon the Second Reading and others depending upon the greatest possible clarity.
I do not suggest that we can in any way inhibit what is done in another place, but I think it was generally agreed that it would be helpful to get all stages in this House so that my Department can proceed with the maximum clarity. There will not be final clarity until the Bill receives the Royal Assent, but the passing of each stage of the Bill is valuable in speeding up the process and in lightening the burdens on what will be a heavily over-burdened staff.

Question put and agreed to.

Ordered,
That if the National Insurance Bill be committed to a Committee of the whole House, further proceedings on the Bill shall stand postponed and that as soon as the Proceeding on any Resolution come to by the House on National Insurance [Money] have been concluded, this House will immediately resolve itself into a Committee on the Bill.

Orders of the Day — NATIONAL INSURANCE BILL

Order for Second Reading read.

4.55 p.m

The Secretary of State for Social Services (Mrs. Barbara Castle): I beg to move, That the Bill be now read a Second time.
In moving the Second Reading I repeat my expressions of gratitude for the cooperation from right hon. Gentlemen, and, in the end, from hon. Gentlemen opposite, towards getting the Bill through all its stages today. Judging from the Order Paper, this unusual procedure does not seem to have inhibited the hon. Gentleman who has just been making protests. He has put down a lot of challenging amendments and we shall be dealing with those which the Chair decides to call.
I also pay tribute to one of my distinguished predecessors whose death I am sure we all mourn, Mr. Richard Crossman. He was a great Secretary of State for the social services. I am conscious, as I stand in his shoes this afternoon, of how much pioneering work he did in this sector and of how hard I shall have to work to begin to live up to the standards of excellence which he set.
Social security legislation is so complicated that one can get bogged down in detail, and one tends to lose sight of the overall effect. The Bill embodies a welter of detail on all the aspects of the uprating which has already been announced. If we are to assess how far any particular uprating Bill takes us along the road to certain agreed social goals we must look beyond the details and judge the Bill in relation to agreed terms of reference. It is very easy to start arguing about 10p on this or 20p on that, and so one loses sight of the overall social situation. It would be a pity if in judging a major uprating Bill of this kind we were to be obsessed with the detail rather than with the path along which we are trying to go.
There are, broadly, two points of reference in our social policy. First, there is the relief of poverty and its eventual abolition. Secondly, there is the aim to roll back the carpet of means-testing

which has now settled over social policies and which has such disincentive and humiliating effects, and which in our view ought not to be part of the social provision which we make for the disadvantaged or handicapped.
Although we believe that in the Bill we are doing something to achieve our first goal—the diminution, or at any rate reduction in the levels, of poverty —we have done nothing towards the latter goal. The Bill does nothing to reduce means-testing. It has been said in earlier debates that this year it was particularly urgent to concentrate on the relief of poverty, that it was essential to give this priority. That is why in the Bill we not only increase national insurance benefits but introduce parallel increases in supplementary benefit. This means that no people will be taken off means-testing, yet equally it means that those who are most in need of help will be assured through the Bill of getting it.
The moral on which we might cogitate some other time—this is not the occasion to develop it—is that it will always be difficult in short-term upratings to reduce means-testing. We shall only do that by much more fundamental changes in our overall social policy. Our longterm policy seeks to do that through the introduction of the child endowment scheme and through long-term pension provisions in respect of which I hope to publish a White Paper before long. Indeed. I hope it will be possible to publish it this summer, because the matter involved is an important background to our discussion of the overall situation. There is also the Finer Report, concerned with making provision for closing other gaps in our social provision, and the review of social security provision for the disabled, which I am committed to put before the House this autumn.
These are long-term goals. It is by a combination of such measures that we can launch the most effective attack on the exercise of means-testing. But at this time, in the Bill, we must concentrate in the short term and as quickly as we can on a meaningful uprating. An increase of 29 per cent. in the single person's standard rate of pension is the greatest single uprating since the National Insurance Scheme was introduced 25 years ago. It gives a big margin with which to deal with price increases since


the last uprating. There has been an increase of just over 5 per cent. in prices since the last uprating, according to the latest figures in February. The increase in the standard rate also gives a margin in hand to deal with problems of inflation which lie ahead. The uprating of the standard rate is backed up by a whole range of Government policies, some of which I shall briefly reiterate.
Judging from what hon. Members say, and from my constituency postbag, a large number of people are still confused and unnecessarily anxious about what the increases will mean to them. I would like to put the position on record again. An hon. Member told me today that he had letters from pensioners stating that it was no good putting up pensions because all the extra money would be swallowed up in rent increases. That is not true. I have announced in previous debates, and I announce again, that my right hon. Friend the Secretary of State for the Environment has made quite clear to the House, through me, that the increases in pensions and other benefits will not affect existing rent and rate rebates and rent allowances.
I hope that hon. Members will bring this fact home to their constituents and that they will also stress the decision of the Supplementary Benefits Commission, to which I have referred in previous debates, at the same time as the increases come into operation to increase discretionary heating allowances by 30 per cent. There will also be increased provision for dietary needs. It is vitally important that these points are realised by constituents. Another form of supplementary help, for women pensioners, came into operation on 8th April. I refer to the abolition of prescription charges for women aged between 60 and 65 years. These details do so get lost in Press reports or television summaries. So I hope that this fact. too, will be made widely known.
The Chancellor's increase in the age exemption relief will prevent the pension increases from being clawed back through taxation. So we have tried to think of all the ways in which this uprating could be eroded and to close the loopholes so as to make the increase real and enduring, so far as Government policy can do so. Of course, the problem of inflation has not been solved yet, but the Govern-

ment's action has been designed to make an impact at the points of most importance to the pensioners and other beneficiaries —the level of rent and rates, of food and fuel prices.
The House will realise that the increases in supplementary benefits as well as those in the family income supplement of which I gave details on 28th March are not dealt with in the Bill but will be dealt with separately by means of regulations in due course. War pensions will also go up. There seemed to be some doubt in some people's minds about this. The increases will be effected by means of instruments under the Royal Prerogative.
The Bill embodies the benefit increases that I have already spelled out in considerable detail in my statement on 27th March, and I do not want to spend the time of the House repeating what is already on record in HANSARD. The Bill is backed by the Government Actuary's Report, Cmnd. 5587, which also includes details of the new benefit rates. As the time for the uprating is so short, we decided to dispense with a White Paper, but I hope that hon. Members will find the Explanatory and Financial Memorandum clear and informative about the principal benefit increases.

Sir Brandon Rhys Williams: I think that the right hon. Lady may be leaving the subject of benefits and I wanted to ask whether the implementation of supplementary benefit for pensioners will coincide with the higher rate of benefit for the people entitled under national insurance. Or will they get their benefit later, or earlier?

Mrs. Castle: No, they will coincide. The aim is to make it all take place at the same time. But I was not leaving the benefits. I am just reminding hon. Members where they can get the full details.
I was about to say that these new rates of benefit are dealt with in Clauses 1 and 3 and Schedules 1 and 3 and they implement our election pledge. By now, everybody will realise that the standard rate of retirement pension for a single person is to go up to £10 and that for a married couple to £16, but I have found that there is still considerable confusion as to which other groups will benefit and to what extent.
I have, surprisingly, met the comment from widows "Why have you done nothing for us?" It is therefore worth while to spell out a little more fully than I have so far been able to do just what the Bill does for widows. The widow's allowance which is payable for the first 26 weeks of widowhood will go up from £10·85 to £14, with additional amounts for children. The widowed mother's allowance and the widow's pension at the standard rate will go up from £7·75 to £10, with added benefit for children.
The widow's basic pension, the old 10s. pension, which the last Labour Government increased to 30s. and which remained stuck there during the life of the last administration, will go up to £3, which restores its relationship to the full widow's pension. The age-related pensions for younger widows will go up and will range from £3 for a woman widowed at the age of 40 or whose widowed mother's allowance ceases at that age, up to the full rate of £10 for a woman widowed at 50 or over.
As I have already said, the increases in benefit in respect of dependent children will also go up, and the total effect on a widowed mother with two dependent children, for example, will be an increase of benefit from £14·45 to £18·90. So I am sure that the House will agree that it would be wrong to suggest that we have forgotten the widows. On the contrary, we have included them among our urgent priorities.
The same applies, of course, to the chronically sick and disabled. The invalidity pension which normally replaces sickness benefit after the first six months is also to be increased from £7·75 to £10. This means, for example, that an invalidity pensioner whose incapacity began before the age of 35, and who is, therefore, on the highest rate of invalidity allowance, will have his income increased from £9·35 to £12·05 a week. If he has a dependent wife and two children, his benefit will go up from £20·80 to £26·95
The industrial injuries disablement pension is also, of course, going up. For the man with 100 per cent. assessment it will rise from £12·80 to £16·40, and there will be increases also for his dependants.
I now turn to the short-term benefits such as unemployment and sickness bene-

fit. The increases that the Bill proposes are such that, for example, a man entitled to unemployment benefit and increases in respect of a dependent wife and two children will find his rate of benefit rising from £15·60 to £18·40, quite apart from any earnings-related supplement to which he may also be entitled. The injury benefit which is paid under the industrial injuries scheme for the first six months of incapacity is to be increased from £10·10 to £11·35 for a single adult and from £14·65 to £16·65 for a married couple.
The right hon. and learned Member for Surrey, East (Sir G. Howe) complained in our last debate that I somehow had not explained the reason for the differential between the treatment of the short-term and that of the long-term benefits. But when his Government introduced that differential last year, my hon. Friend the Minister of State accepted that it was perfectly proper that a Government should feel free to choose their priorities and that, give certain conditions, there was no inherent reason why in one year a Government should not decide to give one section of beneficiaries slightly more generous treatment than another section. But my hon. Friend also laid down two conditions which would be necessary, he felt, before it would be proper to do so. He said, first, that there must be an equitable overall tax system, and, second, that the level of benefits should be at a much higher rate than existed then. We do not claim that we have as yet fully satisfied both those conditions, but we are certainly well on the way to doing so.
It is in that context that we have retained the differential for this uprating. The whole package of improvements proposed by the Government, leaving aside the changes proposed in family income supplement, will cost £1,268 million in 1975–76. Of this total, £46 million will be for war pensions and £81 million for supplementary benefits. The improvements which are included in the Bill will cost about £1,140 million, of which £1,120 million will fall on the National Insurance and Industrial Injuries Funds
This brings me to Clause 2 and Schedule 2, which deal with contributions. I have already explained to the House that the principle which we are following here is that we think that the


broadest backs should bear the biggest burden. That is why the flat-rate employee's contribution for adults will be reduced by 9p, while the employer's share will rise by 44p for a man, 38p for a woman, 29p for a boy and 25p for a girl.
The weekly limit up to which graduated contributions are to be paid is to be raised from £54 to £62, and the rate paid by both employers and employees is to be increased by ½ per cent. This combination, therefore, ensures that we protect the lower-paid wage-earners from any additional contribution burden. The combined effect of the changes means that male employees earning less than £27 per week will not have their contributions increased and those earning less than £20 per week will have their contributions actually reduced by at least 3p a week, while employees earning more than £62 per week will pay an additional 57p a week.
The result of this is that of some 22½ million employees normally contributing to the National Insurance or Industrial Injuries schemes about 3,250,000 will pay contributions at lower rates than the present rates, about 3,250,000 will continue to pay the same amount as they are paying now, about 10,750,000 will pay less than 10p a week more, and about 5,250,000 will pay over 10p a week more. The weekly rate of contributions paid by self-employed and non-employed persons, who, as the House knows, pay only flat-rate contributions, is to be increased broadly in proportion to both increases in benefit expenditure and the average joint contribution for employed persons. Self-employed men will pay an extra 42p a week and self-employed women will pay an extra 34p per week. There will be proportionate increases for juveniles. The proposed flat-rate and graduated contribution rates will come into force on Monday 5th August.
Clause 4 provides for a relaxation of the earnings rule. We are proposing to increase from £9·50 to £13 the level of earnings above which the retirement pension of a man aged 65 to 69, and of a woman aged 60 to 64, is reduced. The effect will be that the standard rate of pension for a single person will not be extinguished until his or her earnings reach £25 per week—instead of £19·25 at present.
At present, the earnings of dependent wives of retirement pensioners—that is to say, wives who have not themselves reached the pensionable age of 60—are treated differently from the personal earnings of retirement pensioners. For the wives, earnings over £11·50 are taken fully into account, whereas for pensioners themselves earnings up to £13·50 lead to only a proportionate reduction in pension. We are taking the opportunity in the Bill to bring the rule for dependent wives into line with that for retirement pensioners—a change which the whole House will welcome. This applies not only to wives of retirement pensioners but to wives who live with invalidity pensioners and industrial injuries disablement pensioners with unemployability supplement. The increase of benefit for these wives will not be extinguished until their earnings reach £21—instead of £15·25 at present. The cost of the changes that we propose in the earnings rules is about £9 million.
Clause 5 amends Section 39 of the Social Security Act 1973 so that for longterm benefits—those paid to the elderly, the chronic sick, the disabled and widows—the annual review is to be based on the extent to which the current rates of benefit have retained their value in relation to the general level of earnings, rather than the general level of prices, unless at a particular review it would be more advantageous to beneficiaries to have regard to the movement of prices.
The clause also provides that a review in the income tax year beginning in April 1975 shall come into force not later than the end of July 1975—in other words, not later than 12 months after this year's increases take effect. In this way our pledge to increase pensions annually in proportion to the movement in national average earnings will become a statutory obligation. Subsequent legislation will deal with the years after 1975.
As the House knows, the Social Security Act 1973 comes into operation in April 1975. I have already made it clear to the House that we find our predecessors' long-term pension plan embodied in that Act unacceptable. As I said earlier, I shall be publishing a White Paper as soon as possible, embodying our own long-term plans. I also told the


House that we shall want to make interim changes in our predecessors' scheme. I promised a statement on that as quickly as possible. The right hon. and learned Member for Surrey, East pressed me on this point during the Budget debate. I fully recognise the importance of what he said. It is true that the pensions industry and others are eagerly awaiting details of these interim changes which we propose. I am sure that the right hon. and learned Gentleman and the House will recognise that I have been in my present job for only about five weeks and that I have had to give priority to this very complicated and comprehensive uprating. But I realise the need for speed, and I assure the right hon. and learned Gentleman that I shall be making an early statement on the interim proposals after the Easter Recess.
I come finally to Clause 6, which makes some minor amendments to social security legislation which are of a technical and non-controversial character. They include amendments needed to prepare the way for the consolidation of social security legislation, which I am sure the House will agree is highly desirable. I shall not detain the House by going into all the details, but should there be any points on which hon. Members require clarification, my hon. Friend the Minister of State will be glad to answer them when he winds up the debate.
This, then, is the Bill which I am commending to the House. It is a Bill which benefits 11½ million people and will give pensioners and other long-term beneficiaries a bigger increase, both absolutely and proportionately, than they have ever been granted in an uprating Bill under the National Insurance scheme. At the same time, the Bill embodies in legislative form the commitment which we made to the country during the election campaign that we would link the increase in long-term benefits to average national earnings. This change, which at last links the increases in pensions and other benefits to movements in wages, is long overdue. I hope that it is a principle which will be accepted and welcomed by the whole House.
The changes in the Bill are costly. I do not conceal from the House that the cost is heavy. It is an expensive uprating. Some people have suggested that it is too

expensive an uprating. I do not believe that the House will say that this afternoon. I think that hon. Members will say that it is a cost the community will be willing to bear. In our view it is essential to give urgent help, priority help, to groups of people in our community who have been desperately hard hit as a result of the inflationary pressures of past years and have been at their wits' ends to know how to make ends meet. It is in the spirit of bringing them urgent help that I commend the Bill to the House.

5.26 p.m

Sir Geoffrey Howe: I begin by joining the Secretary of State in her tribute to our late colleague, Richard Crossman. Hon. Members on the Opposition side of the House have the same kind of respect and affection for him as a person as has the right hon. Lady. During my years in opposition, outside the House I had the privilege of working on an advisory policy group which served Richard Crossman when he was Secretary of State —a rather unusual relationship. I echo everything the right hon. Lady said about him.
I also renew the general welcome the House has given to the increases in the Bill, a welcome given by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) at the end of the Budget debate.
I appreciate the compact way in which the right hon. Lady has tried to set the matter before the House, because we may want to come on to the Committee stage as quickly as is convenient. The right hon. Lady again said that the Bill is being brought into effect by reference to the most restrictive timetable ever. She won the admiration of her predecessor for her success in having achieved that—if she is able so to do. We wish her well along that road.
Therefore, it is in no tendentious spirit that I ask the right hon. Lady whether she is satisfied about the extent to which there has been consultation with all the staff associations and unions involved. I have heard some rumblings of anxiety on their side about the capacity of the system to deliver what the right hon. Lady requires of it. Can she or the Minister of State give us assurances about that? Will they undertake to tell the House if at any time there appears to be any doubt about the capacity of her


staff to carry through this very rapid programme?
I have already made plain in previous debates in this Parliament that we on this side of the House are as anxious to eliminate poverty and to help the most hard-pressed members of our society as are members of any other party in the House. That is why we welcome the measures in the Bill. Even so, we have real doubt whether not so much the Bill but the context in which it is brought forward provides a viable basis for a sustainable social policy in the context of the entire economic policy of this minority Labour Government.
Three main anxieties occur to me at this stage. We make no complaint—apart from the important point that may be raised by my hon. Friend the Member for Kensington (Sir B. Rhys Williams) in one of the amendments—about the general distribution of the burden of the Bill. But we are anxious because it is introduced in the context of a Budget that is likely, viewed as a whole, seriously to impair the capacity of industry and the entire economy to sustain these advances in social provision, let alone further advances. It is the overall burden on the productive dynamo of our economy, against which the measure must be viewed, that causes us some concern.
Secondly, we are concerned—and I know that the right hon. Lady has acknowledged this in the scale of the increases proposed—about the extent to which the increases are likely during the 12 months from July this year seriously to be eroded by the impact of inflation. We shall be debating that matter later as well.
The Secretary of State for Prices and Consumer Protection said yesterday:
Prices are rising at a rate which may reach about 12 to 15 per cent. or even more by the end of the year. Some of the most reliable estimates given by independent economic sources suggest possible rates of inflation as high as 18 or 19 per cent. by the end of this year.—[OFFICIAL REPORT, 9th April 1974; Vol. 872, c. 256.]
The right hon. Lady did not say how far she and her colleagues went along with those reliable, independent economic sources, but if that is the kind of setting to which we must look forward, there is real cause for anxiety about the impact of inflation.
We are concerned not so much with the impact of the cost of contributions, because they had to be raised in any event, nor, taken by themselves, with the impact of increased fuel prices, transport prices, and postal and other telecommunications prices—although they are cumulative in their effect. We are concerned with the additional burden of indirect taxation imposed by the Government, which in itself exceeds the value of the subsidies, with the additional burden of direct taxation imposed on a wide range of wage-earners by the Government, and with the effect of all that on the spiral of wage earners by the Government, and Bill is designed to protect the beneficiaries. We can consider later on the desirability, in that setting, of a more frequent review of the rates of benefit
The third factor which causes us concern is the extent to which this part of the right hon. Lady's social policy cannot be seen as part of a coherent pattern of social priorities. I do not wish now to dwell on the previous Government's record, particularly in the area presided over by my right hon. Friend the Member for Leeds, North-East, save to remind the House that dawn in matters of social provision did not break on 4th March this year. The previous Government made major improvements—[Interruption.]—the hon. Gentleman must listen to this—in all social benefits, making the largest improvements in favour of the pensioners and the chronically ill. They introduced six entirely new benefits to the advantage of 2 million new beneficiaries. They instituted a national scheme of rent and rate rebates. All that was part of a coherent pattern for advancing social provision
Alongside that, one must look with apprehension at the incoherent and predominantly indiscriminate pattern of social provision that lies behind the Bill —£500 million pledged for food subsidies; £50 million pledged, for the third time since 1948, to the abolition of prescription charges; a figure larger than that pledged to a rent freeze, although that will impose a large additional burden on ratepayers and mortgage payers, poor as well as rich. It is that indiscriminate background to the right hon. Lady's proposals that causes us concern
The tragic consequence of that approach is that it will gravely restrict


the scope for more selective, certainly, but much more urgently needed, improvements in social provision for particular categories which we all have in mind. One can start with the—at first sight modest, but I dare say not so modest—implications of the Sharp Report, and go on to those covered by the review the right hon. Lady is obliged to make by October this year in relation to the disabled, especially perhaps the disabled housewives, who are unable to look after their families or homes, and those born so disabled as to be unable to earn any significant wage. We can think again of the important category the right hon. Lady mentioned, those likely to be covered by the Finer Report
We can also think—whether at this stage one thinks of a family endowment pattern or a tax credit scheme—of the huge areas of poverty yet to be conquered. With resources as short as they are of our aspirations, and as short as they always will be, we are anxious about whether it is right to have as much general provision as is implicit in the Government's approach, to the disadvantage of those special groups to which I have referred
The indiscriminate approach is all the more unwise when the present Government have recognised the need for prudence in public spending. The cuts of £1,200 million in public spending which were made by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) last December have been accepted by the present Government. The rate support grant total remains unchanged. The need for prudence is emphasised by the extent to which the right hon. Lady has accepted—and I appreciate that she has not in her own mind done so for all time—the need for a continuation of a wide range of means —tested benefits without any reduction in the numbers involved. I understand that it is her aspiration to see a rollback of the carpet of means tests. That is a view which I share. I have made that plain to the House ever since I became a Member. Means tests are only likely to be eliminable by the application of the methods implicit in the tax credit scheme or something like that
It is against that background that I am glad to welcome the Government's

conversion to the acceptance of the distinction between long-term and short-term benefits. I appreciate that the right hon. Lady quoted from the speech of her hon. Friend the Minister of State last year and explained his recognition of the legitimacy of making some such distinction. It is, of course, an important distinction. As I understand it, the promise which was made in the Labour Party's manifesto was to improve benefits for all the main categories, including the sick and the unemployed, to £10 and £16 in the first parliamentary Session. That is not what we see being done. It is a welcome illustration of good sense that the Government have recognised the case for maintaining the distinction between long-term and short-term benefits
The right hon. Lady used the word "retained". The truth is that the present Government have substantially increased the differential. I make no complaint about that but seek only to draw attention to it. The differential for the married couple rate in existing terms was 60p. Under the new proposed weekly rates the differential between long and short term becomes one of £2·10. That is an increase in the scale of the differential from about 5 per cent. to about 13 per cent. We are glad to notice the extent to which the Minister of State's recognition of the legitimacy of selective wisdom has had its part to play in the construction of the Bill
The House will be familiar with what the Government Actuary says in paragraph 12 of the report on the Bill. He points out that the pattern of benefits and contributions that is proposed will mean that there is likely to be a shortfall of some £200 million. I ask the Minister of State to tell the House what will be the consequence of that shortfall. How will it be met? How can the resources be found for the kind of improvements that we all want in the categories which I have mentioned, including the disabled, in the light of the October review? How are the figures to be reconciled? Can he promise on behalf of the Government the publication of a White Paper which will set out the effect of higher earnings, on the one hand, and of higher contributions and higher benefits on the other, so that the House can in due course consider the position as a whole


when the time comes to consider the consequences of the October review?
I renew my expression of concern about the impact of the Government's thinking and strategy for the long-term development of occupational pensions under the terms of the 1973 Act. I recognise that it is legitimate, and that it always would be so, to discuss some possible changes in the long-term structure regarding, for example, the position of women. I know the extent to which there is a division of opinion about that. When the right hon. Lady produces her proposals for interim changes I hope that she will give us a clear answer about how far married women will retain the option to pay lower contributions in the context of any changes that she proposes
I welcome the right hon. Lady's statement that there will be an early statement on the interim changes that she has in mind. I gather that they are by no means root and branch, although not insignificant. I remain concerned about the extent to which she is still promising that in general, and at some unspecified date, there will be a substantial major replacement or change in the provisions of the 1973 Act. In the debates of 28th March the right hon. Lady said:
 We are committed to replace it, and that remains our long-term policy ".—[OFFICIAL REPORT 28th March 1974; Vol. 871, c. 647.]
That was underlined by an intervention from my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont). It is that which I find regrettable. It is that which promises us a period of long-term uncertainty, however much the right hon. Lady recognises the importance of the anxieties of those concerned in the industry. I ask her to think seriously about the desirability of continuing that procedure
I am challenging not what the right hon. Lady has said about the interim changes which she proposes but the prospect of continuing under a long-term shadow of the threat of replacement at the hands of what I must remind the House is a minority Labour Government. That is something that could do extreme damage. It could cause the persistence of confusion for employers and workers and those concerned with advising them on the development of pension schemes. I shall quote from a speech which was

made by our former colleague, Douglas Houghton in an address to the Financial Times Pension Conference which was held on Wednesday 12th December 1973. Douglas Houghton was then discussing what might happen if the Labour Party were to return to Government at any time when the 1973 Act was on the statute book. He said:
 While the Labour Party has many criticisms of the present Government's 1973 Act, I am convinced that it would be a great mistake for a Labour Government (should there be one after the next General Election) to suspend the operation of the new scheme. That, I am certain must go on.
Prophetically he continued:
 Apart from other reasons, Labour's consideration of its own next step in this field is not yet completed.
Nor is it yet completed. He continued:
 The policy document presented to the October conference was tentative and cautious in its commitments. It restated some guiding principles and that was all. The Crossman Scheme of 1970 cannot be revived in anything like its old form.
A little later he said:
I conclude, therefore, that the 1973 Act should stand for a while before embarking on the next move forward. I see no alternative to that in the short run.
I urge the right hon. Lady in no tendentious or partisan spirit to give close consideration to that advice. I do not challenge what she says about the interim as opposed to the substantial and fundamental changes, but it would be of great service to present and future pensioners to let those concerned with arranging better provisions be given consideration, and to let that part of the provisions for the people who are or who will be in substantial need go ahead on the basis of that which was enacted in the last Parliament. That would be a great service which the right hon. Lady could perform, and I urge her strongly to do so

5.44 p.m

Mr. E Fernyhough: The right hon. and learned Member for Surrey, East (Sir G. Howe) said that the great new dawn did not begin in March 1974. I should like to tell him that it certainly did not begin in June 1970. If he cares to look back at all the social legislation which has meant so much to the ordinary people he will find that, with an odd exception, it all belongs to Labour Governments.
It was a Labour Government in 1948 who brought in the Health Service Act; it was a Labour Government in 1948 who abolished the workhouses; it was a Labour Government who substantially raised pensions, who brought in permanent sick pay for permanently sick people without any reductions, who abolished the means test for the unemployed, who brought in wage-related benefits who increased widows pensions—

Sir G. Howe: The right hon. Gentleman is getting carried away by his historical enthusiasm. Wage-related benefits were introduced by Lord Boyd-Carpenter, as he now is

Mr. Fernyhough: That is: correct. We introduced redundancy payments. If we look at the long list of benefits which have accrued to the ordinary people it will be seen that nine-tenths of them are the result of a Labour Government

Mrs. Lynda Chalker: What about 1964–70?

Mr. Fernyhough: We introduced redundancy payments. Thousands of workers in the hon. Lady's constituency were very grateful that we did so
The right hon. and learned Member said that he was concerned about the nation's capacity to meet this bill. The right hon. and learned Gentleman did more through his speeches at the Dispatch Box to poison industrial relations than almost anyone else. I hope he realises that without a Bill of this magnitude and generosity we could not get in the mines, the workshops and the factories the kind of atmosphere we need if Britain is to be able not only to pay this bill but to overcome the legacy which the right hon. and learned Gentleman and his Friends left to us
Of course, there must be a viable basis. That will depend upon co-operation between employer and employee. We can fix all the pension rates we like but at the end of the day what we are able to produce determines largely not only what pensions will be paid but our standard of living generally. If we had not introduced the Bill two things would have happened. First, we would have broken our pledged word. The Government were committed to this. Secondly, the reaction

among those upon whom we substantially depend for the increased productivity which the nation needs would have been very bitter
We have to look at the Bill in the context of the impact it will have in the mines, workshops and factories. This Bill makes the ordinary British worker feel that he has a Government who are paying attention to the things about which he has been arguing. Even though there may be a price to pay, he is prepared to pay it because he sees in the Bill a measure of redistribution and greater fairness
I was alarmed by the interventions of the hon. Member for Kensington (Sir B. Rhys Williams) who questioned the speed at which we plan to take this Bill through the House. The hon. Member has been here for a long time. He was a member of a party which, when in Government, suddenly discovered that all our soldiers in Northern Ireland had been acting illegally. In one day we enacted a Bill, which was disposed of by 10 p.m., to give our soldiers the legality which they had not had. That Bill raised fundamental issues but everyone knew that it was necessary to give protection to our soldiers. There was no real objection to its being rushed through
Similarly, this Bill will mean a lot for a lot of people. If we do not get it as quickly as my right hon. Friend wishes it will mean that many old people, pensioners, war pensioners, the disabled and so on, will not be getting the benefits they expected as quickly as they expected. As a consequence, they will feel let down. It will be no innovation if the Bill leaves the House tonight in exactly the same way as it is now printed, without any amendments. There were no amendments made to the European Communities Act, nor to the Industrial Relations Act when they were passing through the House. Furthermore, both of those measures had a guillotine imposed upon them. I cannot see why the Opposition should feel that they are not being given a fair crack of the whip because we are trying to get this Bill through in one day's sitting

Sir B. Rhys Williams: Can the right hon. Gentleman explain why we in this House have to deal with the Bill in one day whereas the Government have arranged that in the other place the Bill


should be tackled over the space of a fortnight?

Mr. Fernyhough: The hon. Gentleman ought to know that from tomorrow we are going away for a fortnight. Perhaps he would have preferred the Easter Recess to have been shortened. He may nod in agreement with that, but I am sure that he speaks only for himself. That much was proved yesterday, because the Opposition could have voted to shorten the recess so that there would have been more time to discuss the Bill. They did not do so. There is nothing new in legislation of this magnitude being pushed through quickly
I accept that there are administrative difficulties. Like you, Mr. Deputy Speaker, I have been in this House for a long time. I remember a time when Lord Boyd-Carpenter, as he now is, was Minister of Pensions and National Insurance. It took about seven months from the time that he introduced a Bill to the actual paying out of pensions. I remember that at that time I was in the home of an old collier. He was putting his noughts and crosses and his ones and twos on a piece of paper. He said to me "You know, Ernie, it is absolutely marvellous. Littlewoods tomorrow will get millions of these. It will not be until 5 o'clock on Saturday afternoon that they will know who has got anything to come, and yet by Monday everybody will have had it." I thought "Why cannot we introduce some kind of system which will enable us to pay out benefits as quickly as Littlewoods and Vernons? They have a lot of calculating to do but are able to send out, having gone through millions of coupons within 48 hours, the money that people expect."

Sir G. Howe: We all relish expedition on this scale within the social security system but it is fair to remember that most unhappily for most of us, Little-woods and Vernons pay out to only a tiny selected minority

Mr. Fernyhough: But they have to examine millions of documents to see whether anyone has got anything coming. I am welcoming the fact that for pension increases we have almost halved the time normally taken. This is a step in the right direction. I hope that when my right hon. Friend introduces the next Bill, which I am sure will be within the next

12 months, she will have halved the time again so that we shall be getting much nearer to the point that I was making

Mrs. Jill Knight: Is the hon. Gentleman advocating private enterprise instead of nationalisation for paying out pensions?

Mr. Fernyhough: If war broke out today. we would move millions of children and call up millions of Service men by next week, otherwise we would have a revolution. It would not be possible to call up millions of Service men and say "You will have to wait six months before you get your pay"
Of course we would do it. I am glad that we have halved the time. What I am saying is that I hope that when my right hon. Friend introduces her next Bill the time will be halved again
I welcome the Bill. I know that it will be welcomed by the country. I hope that it will be given a quick and unopposed Second Reading because I believe that this is what the people of the country expect of the Labour Government. We are keeping faith, and if we do that, there is no question that whenever the next election takes place we shall still he on these benches

5.58 p.m

Mr. Kenneth Clarke: The right hon. Member for Jarrow (Mr. Fernyhough) finished as he began, using the Bill as the basis for a short flag-waving exercise on behalf of the Labour Party, making some rather sweeping claims for the unique virtue of his party's attitude to social security which raised eyebrows on this side. Let me set his mind at rest. I shall not today attempt to detract from his flag waving
I begin by welcoming the fact that the Government feel able to produce such a massive increase in national insurance benefits and produce such a shift of resources to retired persons and those dependent on benefits generally. All of us in this House, certainly all those who take part in these debates, clearly share a general commitment to the alleviation of poverty and the position of the groups we are dealing with today. However, I trust that when the right hon. Gentleman and the Labour Party have got their flag waving off their chest they


will continue their policy on a considered basis and attempt to keep up the record

The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): If the hon. Gentleman listened to the statement made by my right hon. Friend the Secretary of State on 27th March and looked at the terms of the Bill, he must know that for the first time there is a commitment written into legislation that pensions will in future be upgraded in line with the movement in national average earnings

Mr. Clarke: I realise that in the Bill the Government have committed themselves statutorily to an annual review and therefore to keeping and maintaining the present position they have reached. If it turns out that they have committed themselves to more than they might have achieved had they not put in that statutory obligation, instead of their again not being able to maintain the improvement of benefits at all this time—as happened under the last Labour Government—they may get themselves into even more difficulty in trying to keep to that obligation, with which they have burdened themselves and successive Governments
Those doubts are not likely to materialise, I trust, but there is this background. Under the last Labour Government we found ourselves in a similar position politically. In 1964 the Labour Party came into office having overbid the previous Conservative Government and put into its election patform an attractive commitment to increase national insurance benefits, with a particular commitment to pensioners. One of the first actions of the Labour Government when they took office in 1964 was to produce legislation giving effect to their election commitment. There was a considerable increase in the real purchasing power of the pension and other associated benefits
I will not enter into the arguments as to whether that rapid commitment in the circumstances of the time led in some measure to the financial crisis which later dogged the Labour Government but, sadly, they were never able to carry on from the particular base they had set themselves in 1964. There was a massive increase in the purchasing power of the retirement pension in 1964, but that purchasing power vis-à-vis prices remained

absolutely static for the six years that followed
Since 1970 there has been not a sudden acceleration at any one stage but a steady improvement of the purchasing power of benefits alongside prices. We on this side gradually accepted a commitment to keep those benefits going up at least as fast as prices and finally, after a considered period, saddled ourselves with a statutory commitment to an annual review to keep benefits in line with prices. It was not a sudden surge on that occasion. It was a continual improvement and an extremely respectable record over four years
Now we find ourselves in some ways in a similar position to that of 10 years ago, when the Labour Party then took over. The Conservative Government had won a great deal of respect and support amongst those people who were benefiting from what we were doing, but Labour overbid what we did and have begun their social policy, as they began last time, by putting into effect what is merely an election commitment-—an election slogan—which I believe began as a gleam in the eye of Mr. Jack Jones of the Transport and General Workers' Union in his attempts to improve the public relations of his union at difficult political times
Nevertheless, the Labour Government have overbid what was happening before to a slight but appreciable extent. I concede that what they are doing exceeds modestly our commitment—the review based on prices on a six-monthly basis—and they are, therefore, now going to bring in this new obligation. They are placing upon themselves and on successor Governments a statutory obligation which future Governments will have to live with. That very statutory obligation seems to me, with respect, to be entirely based on sheer overbidding of what we were doing. Something had to be found for the election platform. Our statutory obligation was to keep benefits in line with prices. The Labour Government have now brought in the proposal to keep benefits in line with average wages or prices, whichever is the most beneficial for those in receipt of benefits. They have accepted that obligation quickly—so quickly, indeed, that the right hon. Lady had to accept that she had not had time to consider detailed policy


problems and needed further legislation to sort out long-term priorities
The right hon. Lady had no time to deal with detailed choices of priorities and small amendments that could have been made. She has not the resources to do very much to the substance of the National Insurance Scheme this time. The Committee stage of the Bill might as well be truncated because so much is swallowed up by this election commitment that, where there are gaps in the present system, no resources have been left which the House could possibly use to plug them
The Labour Party found itself in opposition from 1970 to 1974 with a not very good record in government. It faced a Conservative Government who were achieving success with social policy. Now, the Labour Government have launched out on policy based on an election commitment. They must settle down now to the serious business of relating their social policy to the resources of Government expenditure and to a slightly more —if I may say so without sounding too patronising—responsible approach to the development of social policy than this particular legislation represents
Finally I visualise, even in the short term, some difficulties being faced in taking on the burden and the obligation which is implicit in this legislation and this review of benefits. One matter I should like the Minister to deal with is the way in which the national insurance contributions have been raised, the method which has been used and which has placed such a heavy increase upon the employer
I am not today advocating that the House should oppose doing this. I am not suggesting that the Bill should not be given a Second Reading because of the expense of any feature of the contribution problem. However, what the Government are doing in the Bill already indicates the difficulties that we shall get into in financing this sort of commitment entered into on such a blanket basis because of an electoral slogan
The large increase in the employer's contribution is a payroll tax and, as there are many right hon. and hon. Members on the Government side who genuinely believe in the fiscal merits of payroll taxation, I hope that the Minister will face

up to that and give us some justification for the way in which so much of the burden has been put on the employers. A payroll tax of nearly 50p is being placed on employers. That is what is underlining this change. There was much advocacy in the Labour Party for a payroll tax before the Budget. That is what is presented here. This is the beginning of a payroll tax, one that will have a significant impact on some small employers
I ask the Minister to give us some straightforward justification of the basis of a payroll tax and to tell us how his Government felt able to embark on it in the form of these increased national insurance contributions. Also, in the light of the Labour Government's experience of selective employment tax, can the Minister reassure the House on the likely effects on employment of such a sudden increase in the employer's contributions, particularly as regards the lower paid, those nearing retirement and those groups in marginal employment who proved to be so badly affected under selective employment tax? Will the Minister review the principle of this if there is the possibility of a downturn in demand, a recession in the economy or an increase in unemployment over the coming year? It is an important change in the burden of taxation
I hope that the Minister will not simply repeat what was said in the Budget Statement about merely bringing employers into line with the continental level of contributions, because that comparison cannot be made without bearing in mind the other level of corporate taxation on employers on the Continent
I hope the Minister will accept that in effect the Government have chosen—perhaps they are able to defend themselves and to justify it—a payroll taxation basis for financing a substantial part of the burden of the Bill, and I hope that he will deal quite straightforwardly with that part of the matter when he replies to the debate

6.8 p.m

Mr. Ioan Evans: I congratulate the Minister on bringing the Bill forward so early in this Parliament. The hon. Member for Rushcliffe (Mr. Clarke) said that we cannot afford this measure. I will not deny that the


country is in a financial and economic mess. We inherited that situation from the Tories. However, I remind the hon. Member that a similar situation existed at the end of the war when Sir Winston Churchill, then Prime Minister, told the American Presidential Adviser, Mr. Morgenthau, that Britain was bankrupt. Despite the financial bankruptcy of the nation, in 1945 the Labour Government introduced the Welfare State. The Labour Government passed the National Insurance Act 1946, despite the financial, economic and industrial problems of those days. That Act introduced the most imaginative and generous system of comprehensive social security that this country had ever known
The 1945 Government established the Welfare State and we in Wales are very proud of the fact that it was two Welsh Ministers who were responsible for the great amount of social legislation that went through that Parliament. Jim Griffiths, as Minister of National Insurance, and the late Nye Bevan. as Minister of Health, played a leading part in putting that vast social legislation on the statute book. There were measures governing national assistance and national insurance for industrial injury and the National Insurance Act. My right hon. Friend the Member for Jarrow (Mr. Fernyhough) has given a long catalogue of the achievements of the Labour Government, and it was in those early days that this vast programme of social legislation was put forward

Mr. Ivor Stanbrook: I wonder whether the hon. Gentleman has heard of the Beveridge Report and knows that the Welfare State he was talking about was the subject of all-party approval

Mr. Evans: If the hon. Gentleman will be a little patient, that is the next item. The legislation was put forward because of the demand created during the war years in the fight against Fascism. Those who wanted to fight the evil in Europe also wanted to fight the evil conditions in Britain in the prewar years. The Beveridge Report was the result of deliberations of a committee set up by Lord Greenwood, who was Minister without Portfolio in the Coalition Government, with the agree-

ment of all parties. The Beveridge Report had a tremendous response from the people of Britain at that time because they wanted radical changes
If, however, the hon. Gentleman looks back to the debates that took place at that time, he will find that there was then, as there is now, a great division between the Tory Party and the Labour Party, because, although we say that we want things done and we do them, the Tory Opposition say that they are desirable but always find excuses for not doing them

Mrs. Elaine Kellett-Bowman: While he is referring to the implementation of the Beveridge Report, the hon. Gentleman might pay a slight tribute to the Americans for financing it via Marshall Aid

Mr. Evans: I do not know whether that is relevant to a national insurance debate, but we have allowed the hon. Lady to make her point
Great progress was made during the 1945 Labour Government. But the two periods of Tory Government, 1951 to 1964 and 1970 to 1974, acted as a brake on the building of the Welfare State that had been established in 1946. Whereas from 1945 to 1950 Britain could claim to be leading the rest of Europe in provisions in the social services and national insurance benefits, many European countries are now ahead of us in such provisions
Once again we have a Labour Government, unfortunately a minority Government. Just as in 1945 we had a Labour Government to clear up the aftermath of the war, and just as in 1964 after a 13-year period of Tory Government we had to deal with financial difficulties, so in 1974 we have to clear up the accumulated difficulties in our economic and social affairs brought about by one of the most disastrous administrations the country has ever seen
In 1974 we do not have the ravages of war that we had in 1945; we do not have a deficit of £700 million as we had in 1964. We now have to deal with a deficit running at the rate of £4,000 million, which is our inheritance from the Tory Government
As they have said, there is all the reason in the world for the Government


to take the line of least resistance and to avoid fulfilling their promises to national insurance beneficiaries and pensioners. Over 11½ million people will benefit as a result of the Bill. First, we have the financial difficulties which I have mentioned. Secondly, we do not even have a majority in the House to ensure that we get the Bill through
Despite that, and with great political courage, day by day the Government are endeavouring to meet their commitments to the people. That is why the Government will go down in history as endeavouring to fulfil their promises. Here we have an argument from hon. Members opposite to renege on our promises. The Tories are experts at that
We said that we would introduce strict price controls on essential foods. Under the Prices Bill, £500 million is to be provided to subsidise essential foods. That will help the pensioners particularly, as well as every one else, by stabilising prices. We said that we would prevent the rent increases that were pending. The present Housing Minister's first action was to impose a freeze on all rents, both public and private, until the end of 1974. That will help the pensioners who are not in receipt of a rent rebate. We said not only how we would spend the money but how we would raise it. That is why my right hon. Friend the Chancellor of the Exchequer has introduced a programme of tax reforms. Within three weeks of taking office he has introduced a Budget to reverse the inequalities between rich and poor. The wealth tax is already announced to be on the way, and in the meantime a new gift tax is in operation. That will go some way towards the provision of the Government finance needed to meet the commitment in the Bill
One of the most important promises that Labour made as a party was the pledge that the standard rate of pension would be raised immediately to £10 for a single person and £16 for a married couple. Thereafter the pension is to be firmly linked to average national earnings. These pensions, as my right hon. Friend has already said, will mean the biggest increase in the history of the national insurance scheme. If the Bill goes through all its stages, 22nd July will be the earliest date from which those increases will be paid. Furthermore, we are giving

the same increases to people receiving long-term supplementary benefits
The influence of the trade union movement on all this has been mentioned. This is a demand made by the old-age pensioners. They have said that this is what they feel that we as a nation should be providing for them in order to meet their difficulties. I am pleased that the trade union movement, the Transport and General Workers' Union, Jack Jones and the TUC have said that they wish the Government to make the sort of provision that is being made today
There are sometimes accusations against the trade unions that they are concerned only with their own interests. Here they are, however, supporting an overdue social measure, and that is why I am pleased that the Government are bringing forward the Bill so early in this Parliament
Finally, may I say how much I regretted in the debate on the Queen's Speech to find that the Scottish and Welsh Nationalists were opposing the Bill by opposing the Queen's Speech itself. I do not know whether they are familiar with the working of Parliament. They voted against the Government's legislative programme, and had there been enough Members to support them in their Lobby the Government would have been defeated. We should have needed another General Election, and we should not have had the Bill before us today. I think, therefore, that the Scottish and Welsh Nationalists have a lot to account for to the people of Wales and Scotland to explain their opposition to the Bill
I am aware that the other parties in the House have expressed dissatisfaction that there has not been more time to look at the Bill line by line and clause by clause. I hope they realise that while it might put us to some inconvenience to be debating this matter all through the night, as it may well be if many Members participate, the inconvenience to us will be little compared with the inconvenience to old-age pensioners if the Bill is not passed at the earliest opportunity
I hope, therefore, that the Second Reading will go through promptly, that we shall deal with the Committee stage promptly and that once more Parliament will have played its part in ensuring that


the country again re-establishes the Welfare State and makes the provision for old people that is wanted by everyone

6.20 p.m

Mr. Robert Boscawen(Wells): The hon. Member for Aberdare (Mr. Evans) must have spent a long period in hibernation while he was not a Member of the House. During the past three and a half years the Conservative Government raised the level of pensions by 55 per cent., which is almost double the increase during the period for which the uprating Bill is being produced today. I therefore do not understand how the hon. Gentleman could talk all that rot and bore the House in that way. He had better return to his period as a dormouse. We should be better for it
Like my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), I should like to make my protest at the fact that the Bill is being rushed through in such an incredibly short period. This Second Reading debate is an enormous travesty of what a Second Reading debate should be on such a wide and vitally important subject. It affects a large number of people but not quite everybody as well and as justly as it should. We should have liked to have had a good deal of time in Standing Committee, as happened with all previous uprating Bills introduced by the former Government, in order to improve these provisions

Mr. O'Malley: There is much to be said for Bills of this nature going to Standing Committee for detailed consideration. The stark fact is that had that happened we would have been unable to put the increased benefits into payment on 22nd July. That is why the Bill is being handled in the way it is today

Mr. Boscawen: I do not think that is a very satisfactory answer. We could have had a Committee stage upstairs if we had had a Second Reading last week. Secondly, the right hon. Lady suggested that she wanted the House to clarify its ideas on the Bill to help her staff to introduce it. I cannot see that the House can clarify its ideas on this enormous Bill in such a short time
We welcome what I regard as a magnificent uprating Bill. It goes a very

long way to helping a large number of people. However, I think there is a danger that, by devoting such a large sum to this wide sweep, on pensions only, the needy groups, the smaller groups and the lesser groups will be forgotten. Once they are forgotten they are apt be pushed behind, as we know from experience. I will mention one or two of these groups later. There is a danger when such a large sum is devoted to the flat-rate increase of the retirement pension and other benefits
I turn to some of the casualties that may suffer from such an uprating. The first thing that I do not think is good is the increase in the supplementary benefit at exactly the same rate as the retirement pension, because the tendency will be to increase the number of people on supplementary benefit. We all know that that happens. We are not saying that we are ashamed of it, but it is essential in the system. We wish to see the means-tested supplementary benefit phased out. It could have been dealt with by widening the differential between the two, by not raising the supplementary benefit quite so high but saving money by doing it—putting it on by increasing the pension a little. In that way we could gradually have moved away from the means-tested benefit, because at some stage it must be done
The tax-credit scheme gets away from the means-tested benefit for those at the higher end of the scale but not for those at the bottom end. I had hoped for new ideas from the Government on that subject. This is one casualty of rushing the Bill. Another issue is that we must study further the question of the married woman's option. We must consider the difference between two single persons contributing in full and drawing their retirement benefit. On the one hand a person gets £20, while on the other hand the married woman who has taken her option draws £16. There is thus a difference of about 25 per cent., and this situation has not been changed
No great thought has been given in recent years to the difference in needs of the single person living in a house alone and of two people living together. That needs more study. Is the differential between the married couple in which the woman opts out and the married couple


in which the woman is counted as a single person correct? I think that that should be considered and I should like to hear the views of the Minister, who I know takes a great interest in the matter
Another matter—a detail but one which will concern many people—is the terrific increase in the contributions of the self-employed and the non-employed. I am thinking especially of the woman who cares for aged parents or relatives. She will continue to struggle to keep up her contributions so that when her parents or relatives have passed on she will be able to draw a reasonable pension in her own right. This is a harsh increase in contributions. Some of these people, the non-employed—in name only —and the self-employed, are amongst the poorest in the country. Self-employed people are hit hard from many angles such as unemployment benefit and rent and rate rebates. This is a matter that the House ought to examine carefully in Committee
I am concerned that nothing has been done about grants. Occupants of the Front Bench know that I am especially concerned about the death grant, which has not been increased. When in opposition the Labour Party supported us in trying to get this improved. I am concerned about the small group of aged, needy people who do not get the grant at all, or who get it at a reduced rate. I hope to bring that matter up in Committee
All in all, though we welcome the broad sweep of the Bill, we may well find it detrimental to a number of small groups of people. It was those small groups for which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) did so much during the three and a half years we were in office. My right hon. Friend tried to extend the frontiers of aid to small, needy groups of all kinds, in particular to the most needy group, the long-term chronically sick and disabled. That represents a casualty of the Bill, and I look forward to hearing a good deal more from the Government—if unfortunately they are to remain in office—about what they will do to help the long-term disabled

6.30 p.m

Mr. Bruce George: I am proud to be speaking from the Gov-

ernment benches so soon after my hon. Friend the Member for Aberdare (Mr. Evans), who represents the constituency in which I spent most of my early life. I welcome him back to the House, and I assure hon. Members that, with his 11,000 majority and because he is such an able Member of Parliament, there is little prospect of his returning to hibernation for a long time to come
I shall be brief. I wholeheartedly endorse the Bill. The Opposition apparently have condemned it for the speed of its introduction. All I can say at this stage is that my constituents would not agree with that condemnation. When I return to my constituency at the weekend, they will be delighted to tell me how pleased they are that this measure has been introduced so speedily
My hon. Friend the Member for Aberdare and I represent areas which knew poverty 30 or 40 years ago and still experience it today. It is easy to think that in this modern age poverty has vanished. It may have in some constituencies, but certainly not in many constituencies represented on this side of the House
The Bill will not eliminate the problems of poverty, but it will go some way towards solving many problems. The Bill is not confined to one narrow area. Some people may think it is confined to old-age pensioners, but I was pleased to hear the Minister say that widows' benefits are to be increased. I believe that in the past widows have been sadly neglected, and when canvassing at the election many hon. Members were made more than aware of the inequalities and of how people felt about the law relating to widows and widows' benefits
I am pleased that the earnings rule for widows is to be changed, and I hope that in the not-too-distant-future this rule will be relaxed even further
I listened with great interest to what Opposition Members said they had done for the poor and for the underprivileged, but the fact is that they managed to throw more people into the area of poverty than had been done for more than a century. Independent research has shown that about one in five of the population today are living on, just below or just above the poverty line. That is not an indictment of the previous Government; it is an


indictment of Governments in general that in 1974 we still have, and apparently still tolerate, such a large proportion of our population living in poverty

Mr. Timothy Raison: Does the hon. Gentleman acknowledge that every time the supplementary benefit rates are raised, by definition one automatically increases the number of people living at or below the poverty line? Is he arguing that the supplementary benefit rate should not be increased?

Mr. George: No. Clearly, the definition of poverty and the poverty line varies considerably. It depends how one defines it
Pensioners are pleased with what has happened. It may be that the present pension proposals originated in the glint of one person's eye, but I think probably not, because at a time of economic crisis the Government realised that they had to honour the pledges that they had made to the electorate just a few weeks ago. At a time of economic crisis it is not right to say that we should not raise benefits. A time of economic crisis and inflation is the very time at which we should look after those who are least able to look after themselves
In an article published a short time ago, Mr. Frank Field a spokesman for the Child Poverty Action Group, said:
The Government deserves credit for increasing pensions and other benefits .. This represents a real boost in the incomes of a large number of poor people, and has been accomplished at a time of severe economic difficulties.
We have been accused by hon. Gentlemen opposite of over bidding. We have not done that. I am proud that, despite the problems facing the Government—problems that are not of their making—they have decided to embark on something that will be expensive, that will not be simple to finance, but something about which many people outside the House—pensioners, the disabled and those who do not enjoy salaries of £4,500 a year and more—will be elated

6.36 p.m

Mrs. Elaine Kellett-Bowman: Like my right hon. and hon. Friends I welcome the pension increases, but I share the disquiet of my hon. Friend

the Member for Wells (Mr. Boscawen) that the Bill is not as just as it should be. I feel strongly, like my hon. Friend, that we should have been able to discuss the Bill at greater length in the wider context of Government spending. There are many people in my constituency, for instance, who feel that the money being spent on free contraceptives for schoolgirls and other unmarried people would have been better spent on raising the death grant for the very elderly or providing a death grant for those over 90 years old who get no grant at all

The Under-Secretary of State for Health and Social Security (Mr. Robert C. Brown): Does not the hon. Lady think that it would be more honourable if she conceded that her right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) intended to introduce free a contraceptive scheme?

Mrs. Kellett-Bowman: That is not in the least true. The hon. Gentleman is totally misinformed. My right hon. Friend stuck firmly to his guns in making prescription charges for contraceptives except for socially necessitous people who required them. The hon. Gentleman is mistaken in his belief. My constituents feel strongly about this matter
When I was canvassing during the General Election campaign—I go round from door to door between elections, not only during election campaigns —I found that the people I met preferred the steady approach that the Conservatives had to the improvement of welfare and benefits to the once-for-all, flash-in-the-pan approach of the previous Labour Government to which reference has already been made
One provision that has been missed out of the Bill but which was greatly appreciated by many people—a large number have mentioned it to me—was the £10 Christmas bonus. I hope that the money now being spent has not pre-empted that particularly useful provision
I look too at the £500 million to be spent on food subsidies which is the equivalent of £62·50 per pensioner. One wonders whether an indiscriminate subsidy of that dimension across the board is good value for money. I shall not detain the House further, because I know that we have a great deal of work to get


through, but I submit that we should have had a chance to discuss the Bill in much greater detail

6.39 p.m

Mr. William Hamilton: The hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) has been com mendably brief and I shall try to emulate her example
I have taken part in several debates on this subject, and they become somewhat like auction marts. It is not a bad thing, I believe, for the parties to compete in this sphere if it improves the lot of those who deserve help. That is what both parties have done. I pay tribute to the right hon. Member for Leeds, North-East (Sir K. Joseph), my right hon. Friend's predecessor. He did what he could in his own light and he has a record of which he need not be ashamed. That is not to say that another party cannot do better. Indeed, it should try to do better. I have no doubt that after the next election the Government in power will do better still. This is the essence of progress in our Welfare State
The important principle that tends to be overlooked is that for the first time the pension will be tied to average earnings. It simply means that for the first time in our history pensioners will have union bargaining power. This is an important principle far outweighing the figures enshrined in the Bill
I agree with the hon. Member for Lancaster and my hon. Friend the Member for Walsall, South (Mr. George) about the Bill going into Committee. All Bills should have detailed examination. It is not a convincing argument that if we are to get the increases in the agreed time we must get through all stages in one day, because we could have a retrospective clause. We could have a full Committee stage on the understanding that the proposed increases should be retrospective to Second Reading or the day on which the Committee stage began
Many people are interested in these matters, and inevitably there is criticism about exclusions. The death grant has been mentioned. Indeed it is mentioned repeatedly in every debate on social security. Of course, other priorities have also been mentioned
The hon. Member for Lancaster referred to contraceptives. I do not think

that was part of our social contract with the trade unions. This Bill is part of it. The whole success of the exercise depends on the other party to the social contract, or compact delivering the goods
The right hon. and learned Member for Surrey, East (Sir G. Howe) rightly said that unless we produce the wealth we cannot distribute it, still less redistribute it. I said earlier that the most important principle enshrined in the Bill was that the pension was related to average earnings. There is a considerable redistributive element in that. The crucial test of a welfare provision is whether it is redistributive. Politics in this House concern how we redistribute the wealth of the nation
The Bill is an attempt, albeit imperfect and subject to all kinds of criticism, to divert resources from those whom we think have too much to those whom we think have too little. The argument across the Floor of the House will always be about who has too much and who has too little. It is one of the basic conflicts between the two major parties
The Tory Party, generally speaking, looks after the wealthy. A succession of Conservative Government Budgets enshrined this principle. Of course, they give a few crumbs to those who are entitled to family income supplement. That is all right in principle, but it is little more than a crumb of comfort to many people
The hon. Member for Lancaster referred to the £10 bonus. That was the charity approach by the Tory Party that we found extremely objectionable. It was an admission that the basic pension was inadequate. We want to get rid of the charitable element in social security. I hope we will make a commitment not to give the £10 bonus but to ensure that the pension is adequate to make the bonus element unnecessary
The Bill is entitled to a fair wind. I hope that we shall not have another such Bill dealt with in this way. I ask that consideration be given to the retrospective element. I do not think that the period between Second Reading and implementation of the provisions of the Bill can be reduced substantially, although we do not know what automation can do. I am sure that a certain element of retrospection will satisfy many people. We do it with wage claims. Surely what


applies to wage claims should apply to some extent in the social security sphere
I hope that the Government will bear in mind, when next they introduce a Bill. that it must be examined in detail in Committee and that there might be consideration of the retrospection element

6.45 p.m

Mr. R. A. McCrindle: I sense that the House is anxious to move on to the next stage of the Bill, so I will simply welcome the broad outline of what is contained within it. It would be churlish in the extreme not to pay tribute to the Government for honouring their election commitment as early as they have done. Indeed, there are many parts of the Bill with which few on this side will find it necessary to disagree
I shall try to adopt a similar tone to that adopted by the hon. Member for Fife, Central (Mr. Hamilton). but I slightly challenge one point that he made. He alleged that the £10 Christmas bonus was seen as some kind of charity by hon. Members opposite. I do not accept that. Many hundreds of pensioners to whom I have spoken welcome the receipt of this money and do not see it as charity. I cannot understand why, when we try to improve the situation of pensioners at a time of the year when certain festivities take place by giving them an extra £10, that should be singled out as charity
I should like to make four points on the Bill. The first concerns the earnings rule. I am disappointed that in a Bill which takes such a wide sweep at the reform of national insurance a rather broader attack on ending the earnings rule has not resulted. I have listened to explanations by Government after Government for the earnings rule not being abolished but simply abated
I understand that £160 million would be the cost of complete abolition. Therefore, we must be careful not to recommend irresponsibly that this be done. On the other hand, I wonder whether the Government are aware of the intense opposition among many old people to the operation of the earnings rule. They see it as somehow qualifying the independence to which they have looked forward for such a long time. When told that it is the retirement pension and technically

they have not retired and so it is a fair rule to adopt, few accept it. I wish that there had been a wider attack on the ending of the earnings rule
Secondly, I refer to maintaining the value of the pension. In this connection I should like to take up another point made by the hon. Member for Fife, Central. He said that to tie the pension to earnings was to bring the bargaining power of trade unions to the side of the pensioners for the first time. Looking back on the period of the Conservative administration, he will find that, far from pensions having just kept pace with earnings, they went ahead faster. I do not have the figures to hand, but I recall that average earnings went up by about 48 per cent. and pensions went up by about 55 per cent. in that period. I do not necessarily dissent from the hon. Gentleman's view, but I do not wish him automatically to assume that pensioners will do better under that rule under his Government than by the approach of the previous administration
Thirdly, I refer to the reviewing of pensions. The idea of constantly reviewing pensions is accepted on both sides of the House. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), the former Secretary of State for Social Services, introduced that innovation in 1971. The Conservative Party, in its election manifesto, indicated that in future pensions and benefits should be reviewed at six-monthly intervals. I regret that the Government have not taken advantage of introducing that proposal into the Bill. In a period of almost unprecedented inflation, which hits very hard the section of the community about which we are concerned in the Bill, reassurance on the maintenance of the value of pensions and benefits on a regular basis, as proposed by the Conservative Party in its election manifesto. would be extremely welcome
I wish to echo the points made by my hon. Friends the Members for Wells (Mr. Boscawen) and Lancaster (Mrs. Kellett-Bowman) about the death grant. I deeply regret that this has been omitted from the Bill. I hope that the Minister of State, for whom I have considerable regard, will not be too put out if I recall the passion with which he attacked the Conservative Government for failing to increase the death grant in the 1972 or


1973 uprating Bill, a point on which he was supported by the right hon. Member for Blackburn (Mrs. Castle).
I was one of those Government back benchers who on that occasion, with some temerity, abstained and also voted against the Government to express dissatisfaction on the matter. I hope the Minister of State will understand how disappointed we are, with all those election promises of the Labour Party being implemented, to find that one which goes to the very heart of poverty is still not being enforced. I know that Rome was not built in a day, and that will probably be the line adopted by the Minister in reply, but was no thought given to introducing temporary assistance to those in greatest need? Could consideration not have been given to increasing the death grant where the deceased or the beneficiary was in receipt of supplementary benefits?
The hon. Member for Rotherham (Mr. O'Malley) accused us two years ago of paying only £30 when £70 was the average cost of a funeral. It will not have escaped his notice that with inflation continuing apace the cost is now closer to £100. I hope that the Minister will come back on this point as quickly as possible with a recommendation for an increase.
I turn now to a subject which I raised with my own Government, the failure to extend any of the benefits outlined in the Bill to British citizens resident abroad. I hope that the Government will pay particular attention to this point. In the last Parliament the Labour side tended to dismiss it as an attempt to provide benefits for people living in Spain and Portugal who did not require them. I say with all possible compassion that this is demonstrably not so. These people have no Member of Parliament, and since I championed their cause I have received vast quantities of correspondence. I have letters which I should be delighted to show the Minister which reveal that much hardship is suffered by people who may have gone to those countries almost entirely for health reasons and now find, with inflation rampant, that they still receive only the pension which prevailed in this country when they left. Very real hardship is being experienced.
Like their predecessors, the Government are being blind to these cases. Many of these people are faced with the simple choice of continuing to press

for an increase in the pension or returning to this country and becoming a burden on the National Health Service. For those reasons I hope that the Minister will be able to say what progress has been made in the discussions between Britain and Spain and Portugal on a reciprocal agreement. If there is no likelihood of that agreement bearing fruit in the near future I hope that the Government will be prepared to take interim measures to protect this section of British society which feels it has been long neglected.

6.57 p.m.

Mr. William Molloy: I thank the hon. Member for Brentwood and Ongar (Mr. McCrindle) for his generous remarks about the Government's endeavours in the Bill. I add my congratulations to those already offered to the team that was responsible for preparing the Bill and thus implementing the Labour Party's General Election pledge. It is a healthy sign when all parties are competing to see who can do best in social services. The former Government's health and social security team tried hard and endeavoured to do a good job. Ironically, their greatest adversaries were sometimes sitting alongside them, and in that respect their endeavours were indeed brave.
We must not be too complacent about our progress so far. The massive social reforms which were introduced by James Griffiths and Aneurin Bevan are now 25 years old, and progress since their day has been far too slow. The political parties may be prepared to compete, but often the real pressure is exerted by people outside the House of Commons. I wonder whether the time has not arrived to accept that there are people pf retirement age who are frustrated from contributing to the economy by the earnings rule. I congratulate the Government on easing that situation, but the time has now come to abolish that rule.
In spite of our economic troubles and the prices problems, we must now move on to the ultimate stage of abolishing the contributory element under which the employer and the worker buy a fancy-coloured stamp which is subsequently defaced. We must move to the simple solution produced by Nye Bevan, in spite of the blandishments of the experts,


of a free comprehensive health service. The health service should be paid for out of general taxation and should cover all aspects of health from the cradle to the grave.

6.58 p.m.

Mr. Ivor Clemitson: The Bill in some ways takes a useful step towards making contributions more equitable with a reduction of the flat-rate contribution by 9p, the raising of the upper limit below which graduated contributions are to be paid, the increase in the percentage of graduated contributions, and so on. These are moves in the right direction but I should like to see a further move along that road. I should like to see measures introduced into the graduated contribution system by which the lower paid would pay less and the higher paid more. Eventually I should like to see the flat-rate contribution, which is nothing more than a form of poll tax, eliminated. I want to see emphasis on the principle of payment according to ability and receipt according to need.
The increases are extremely welcome. This is the largest single rise ever and it represents the fulfilment of clear election pledges. The Government have linked the increases with average earnings rather than with the retail price index. These things are extremely welcome.
However, we must be careful not to be carried away by euphoria. Figures in April last year showed that the lowest average earnings for male manual workers over 21 years were £37 a week. Even using these figures, which are almost a year old, the new pension for a married couple is only 43 per cent. of that amount. It must now be below 40 per cent. if one is to take the latest lowest average earnings figure.
We must not only keep pace with rises in earnings but we must over the years increase the percentage which pensions and other benefits represent in relation to earnings. I welcome the Bill for its increased benefits and because it is a clear fulfilment of election promises and moves towards a greater redistributive element in contributions, but let us never be satisfied with our progress in this sector.

7.1 p.m.

Mr. Timothy Raison: The debate this afternoon reminded me of something which was apparent in the last Parliament. Day in and day out in discussion of social policy Conservative back benchers had much more to contribute than Labour back benchers. Anyone who has heard today's debate will acknowledge that there has been from the Opposition a string of speeches with important and relevant points, whereas the greater part of Government backbench contributions consisted of either references to admirable figures such as Aneurin Bevan and Jim Griffiths or pure party polemics.
I exempt from that criticism the hon. Member for Fife, Central (Mr. Hamilton), who made a reasoned speech, but he may be in for a little disappointment when he stays to hear discussion on the tying of the pension to average earnings. The clause relating to that shows that the matter is not as simple as he thinks.
The Opposition welcome the uprating embodied in the Bill. I congratulate, in her absence, the Secretary of State on her achievement. When we have listened to her during the last few weeks, the right hon. Lady has reminded us from time to time of a magniloquent actress carrying out a series of farewell engagements. But we respect her and hope that the day of her retirement comes soon and that she enjoys the pretty village in my constituency, where no doubt she will be spending it.
If I were a Secretary of State for Education and Science I would not share the enthusiasm which has been felt on the Government side. It is evident in the short time of this administration that while the Secretary of State for Social Services has scooped the pool, the Department of Education has had nothing at all.
We must recognise that the Bill raises problems. There will be imposed on industry a heavy burden—my hon. Friend the Member for Rushcliffe (Mr. Clarke) was right to stress this—at a time when there are serious problems in industry regarding profitability. Higher contributions will do nothing to case the situation and they could also hit hard some self-employed people.
In the strategy of which the Bill is part, the commitment to massive food subsidies seems particularly perverse. If £500 million is to be spent on relief for housewives, what could be done if the same amount were spent on family allowances? It is relevant to the discussion of the overall strategy to quote Frank Field, formerly of the Child Poverty Action Group, who stated in an article in The Guardian on 2nd April:
It is now clear that the reason why family allowances were not increased in the Budget was that they are given a low priority by the TUC; lower than food subsidies, for example. But not only are food subsidies a less effective way of protecting the living standards of the most vulnerable group—i.e. families with children—than family allowances, but this approach may prove to be a very expensive miscalculation.

Mr. O'Malley: Before the hon. Gentleman starts complaining or quotes people who say that the Labour Party gives a low priority to family allowances, he should be aware that his party gave no priority at all to family allowances. The late Iain Macleod gave a promise in 1970 to Frank Field and the Child Poverty Action Group, but that promise was never kept.

Mr. Raison: Our party came up with a tax-credit scheme which represented the most positive way to tackle poverty yet put forward. We welcome the benefits in the Bill, but the Government have got themselves boxed in by a combination of the benefits and their foolish commitment to enormous food subsidies. In spite of what the Secretary of State said, the Government do not have a strategy for family poverty.
When in opposition, the Secretary of State said in the Standing Committee on the Social Security Act 1973:
We want family allowances increased on a statutory basis every year."—[OFFICIAL REPORT, Standing Committee E; 1st March, 1973, c 755.]
The right hon. Lady voted for that, as did the Minister of State, and she slated the family income supplement. She also sought an annual review of death grants and maternity grants, as well as an earnings review. But we are not seeing these things now. Worse still, we see that the tax-credit scheme is being dropped, or is at least disappearing into limbo. What is needed is progress towards the first stage of tax credits, a

stage at which it would be possible to help families, in particular in regard to the first child. The Government have a vacuum in their social policy rather than a coherent strategy as the Secretary of State has argued.
We should like to see more encouragement to people drawing benefits to earn as much as possible. We welcome the improvement in the earnings rule, but the time is coming when this should be included in general review procedure. In addition, we should like to see the disabled have a better chance to earn while drawing benefit. We should also like to see general improvements in the disregards for supplementary benefit, which have not changed since 1966. For instance, there is an assumption in assessing entitlement to supplementary benefit that modest savings of £1,800 are assumed to provide an income of £6 a week, and £1 of this is disregarded. That is not realistic. Who could derive that income from such a sum? There is also a case for different arrangements concerning disregards for married couples as opposed to single people. These points must be pressed in the months ahead.
We have severe criticism of the Government's overall social and economic strategy, and during the Committee stage this evening we shall particularly press the question of the six-monthly review. However, taken in isolation we welcome the help given to pensioners and other groups in the Bill and we shall support its Second Reading.

7.8 p.m.

Mr. O'Malley: Listening to the hon. Member for Aylesbury (Mr. Raison), I found it hard to believe that he was speaking for a party which failed so badly over its period in office to look after the interests of families in which child poverty has been endemic and rampant, and failed completely to deal with even the basic financial requirements of retirement pensioners. After the progress which the hon. Member for Rushcliffe (Mr. Clarke) claimed for retirement pensioners under the Conservative Government, when his Government went out of office the single retirement pension represented a lower percentage of national average earnings than in 1967, nearly six years before. That was the kind of progress made for pensioners under the Conservative Government.
Both the hon. Member for Aylesbury and the right hon. and learned Member for Surrey, East (Sir G. Howe) talked about everything but what is in the Bill. They talked about the Budget and family poverty in general but were loth to criticise any details of the Bill. The right hon. and learned Gentleman said that this Government had no coherent plan on social provision. Our plans for child endowment and our long-term pension plans will certainly not condemn millions of retired people to dependence on means-testing as the Conservative Social Security Act 1973 would have done.
Many voices have spoken from the Conservative Party tonight. They have not spoken with one voice. The right hon. and learned Member for Surrey, East was careful to welcome the Bill and to make no criticisms of its content, but that was not the case with his back benchers. The provision written into the Bill for guaranteeing pensions to rise in future in line with national average earnings is a new, indeed a historic, feature of legislation in this country, yet the hon. Member for Rushcliffe, apparently, unlike his right hon. and learned Friend, was worried about it. He said that it was not "responsible" financing. That is an example of what the hon. Member for Aylesbury called the superior contributions of Conservative Members—a suggestion that we should move back from a system in line with average earnings to the inferior price-proofing formula of the last Government.

Mr. Kenneth Clarke: I hope that the hon. Gentleman will recall that I was contrasting the way in which we moved over a period to a statutory commitment to a regular annual review in relation to prices and managed to carry out that commitment steadily, having made it as part of a coherent strategy, with the way in which his Government have rushed in with this Bill, immediately, breathlessly, after an election simply to overbid our achievement. I hope that he will read what he has said. His approach is not reassuring me that this commitment, however important, is being undertaken in a responsible fashion.

Mr. O'Malley: I am grateful. The hon. Gentleman is making my task easier by the minute. According to him, this

Government "rushed in" with a major rescue operation for retirement pensioners, for widows and for other longterm beneficiaries who were in such difficulties as a result of the previous Government's policies. We make no apologies for rushing in; rather the reverse. I am sorry that he apparently does not favour bringing in this substantial increase by 22nd July, the first available date.

Mr. Peter Hordern: The Minister is making a big point about the last Government's record on pension increases and the commitment of the present Government with respect to average earnings. I think that he will allow that this record demonstrates plainly that, under the last administration, the increase in pensions exceeded the level of the average increase in earnings. He was very selective in his choice of 1967 as the date for his example of what proportion of earnings was represented by the pension. How does the Conservative record compare with late 1969?

Mr. O'Malley: My figures are not wrong. If we compare the situation in 1969 and that towards the end of the Conservative period of office, we see that there was not a forward progress, as the hon. Member for Rushcliffe claimed. In fact, pensioners were gradually but inexorably moving backwards.
I need not have raised all these contentious matters. I had thought that this debate would be a happy affair and that we should be able warmly to congratulate each other, but hon. Members opposite have made provocative speeches to which I thought it necesary to reply at least in some measure. Public opinion and the opinion of hon. Members generally has given a warm welcome to the Bill. This kind of increase is badly needed by the pensioners.
I am delighted—I say this in all friendship—that the Conservative Party has changed its mind about whether there should be an uprating to £10 and £16 and whether that was a responsible thing to do. On one of the last occasions on which I was engaged in Parliamentary Questions, I asked the then Parliamentary Secretary, who knew this subject so well during his stay in office:
Is it not clear that the best way to help the pensioners is for the Government


to give an immediate pension increase of £10 for single persons and £16 for married couples? If this Government will not take that step, then after the election the Labour Government certainly will.
The hon. Gentleman gave me a birthday present when he said in his reply:
Would the hon. Gentleman now like to say how much his extravagant promise to the pensioners would cost, and who would pay for it?"—[OFFICIAL REPORT, 22nd January, 1974; Vol. 867, c. 1429–30.]
We are keeping that "extravagant promise" and I am delighted that no hon. Member—or almost no hon. Member—believes any longer that it is extravagant. If anyone who wanted to take that view says that this is a U-turn, it is a U-turn which every person of good will in the House can welcome and respect.
The hon. Member for Rushcliffe asked about the decision that employers should pay what my right hon. Friend described as the lion's share of the cost of the uprating. Employers will be paying 68 per cent. of the total cost, employees 11 per cent. and the Exchequer 18 per cent. So far as our social contract with the trade union movement is concerned, therefore, 86 per cent. of this uprating will be met by Exchequer supplement and the employers, and only 11 per cent. from employees.
I could enlarge on the justification for that, but what we are doing is strictly in line with what the previous Government did in the Social Security Act 1973, under which, by April 1975, employers would have been paying an annual rate of about £350 million more than under the National Insurance and Supplementary Benefit Act of 1973 at the current contribution rate. So I do not think that there is any difference between us, as official parties, that employers should be required in future to pay a higher percentage of the total cost than in the past.
The hon. Member for Brentwood and Ongar (Mr. McCrindle) mentioned the death grant. We are very conscious that provision about this is not in this Bill. The hon. Member had no need to remind me and my right hon. Friend of our speeches on this subject. We looked those speeches up when we were considering what could be done in the uprating. Quite simply, apart from the global cost

of £1,268 million in a full year of the uprating, it was imperative on this occasion to slim down and streamline the legislation as much as possible. That is the basic reason why this is a much simpler Bill than many others of its type. We are concentrating resources on the £10 and the £16 pension.
The hon. Member for Wells (Mr. Boscawen) took a different view from that of his Front Bench. On 27th March the right hon. and learned Member for Surrey, East had welcomed the fact that supplementary benefit rates were to be moved in line with pension rates. But the hon. Member for Wells thought that that should not have been so. In a period of rapid inflation such as we are experiencing today, it would have been indefensible to have said to retirement pensioners on supplementary benefit—who, therefore, are by definition the poorest section of retirement pensioners in the community—that they should receive less in total as a result of the uprating than any other section of retirement pensioners. I grant to the hon. Gentleman that it is desirable, as my right hon. Friend the Secretary of State said, to get a move and a switch, not only with retirement pensioners but also with other beneficiaries, away from dependence on means-tested supplementary benefit.
The right hon. and learned Member for Surrey, East asked about the capacity of the staff to carry through the uprating. The House generally knows the problems of staffing that we have and the problems arising from the complex and sophiscated nature of our social security system. I believe that the staff, on whom we have to rely so much, will do their utmost to see that these pensions and benefits are brought in on the appointed date. But if the right hon. and learned Gentleman wishes to be kept informed of any developments, no doubt he will table Questions, which I should be pleased to answer.
The right hon. and learned Gentleman commented about the fact that short-term benefits had not risen by as much as long-term benefits. That is true, but they will be increased by 17 per cent. over present rates. This increase can be expected, even at the present rate of inflation, to exceed the move in retail prices over the period between the last uprating and the proposed uprating,


which period covers 10 months. So we are raising these rates by 17 per cent. The previous Government gave an 8·9 per cent. increase in short-term benefits over a period of 12 months.
The right hon. and learned Gentleman asked how we would make good the shortfall mentioned in paragraph 12 of the Government Actuary's Report. As my right hon. Friend the Secretary of State has said, we shall be introducing any necessary legislation and informing the House of how we shall be making good that shortfall.
Lastly, the right hon. and learned Gentleman asked about the future of the Social Security Act 1973. I say two things to him. We have made plain our opposition to the type and level of provision of that Act from the day it was published as a Bill, through all its progress through the House of Commons and subsequently. We are not prepared to see an Act remain on the statute book unamended when it treats women as second-class citizens and condemns millions of our people in retirement—well into the twenty-first century—to having to depend on means-tested benefits of one kind or another.
It is appropriate for my right hon. Friend the Secretary of State and myself to consider carefully everything that the right hon. and learned Gentleman has said on this subject. I know of his pedigree and stable on this matter. Along with Mr. Arthur Seldon, the right hon. and learned Gentleman was a member of the "STOP" campaign when the Crossman Bill was going through the House. The right hon. and learned Gentleman has put forward serious views, and we shall consider them.
We on the Government benches are not hostile in any sense to the provision of good occupational pension schemes. Such schemes are highly prized, rightly and understandably, by men and women who are fortunate enough to be in good schemes. Therefore, in any future policy emanating from the present Government, that will be one of the basic principles and premises on which we shall operate.

Mrs. Kellett-Bowman: Millions of married women like the married woman's option. Will the Government be depriving them of that option, which we always allowed them?

Mr. O'Malley: I understand the hon. Lady's point, but it would be wrong on Second Reading of this Bill to indulge in long-term thinking about the shape of future pension schemes, including the married woman's option.

Mr. McCrindle: On the question of occupational pension schemes, it is important that there should be a message coming forth very clearly from the Government Front Bench tonight to the industry and to the many employers who are now well advanced in making their arrangements under the Social Security Act 1973, accepting that the Government will no doubt want to introduce amendments in accordance with the philosophy which they have outlined over the years. But can the hon. Gentleman at least say that his advice to employers and to people in the pensions industry would be to go ahead with the arrangements for these occupational pension schemes in the knowledge that the basic structure of the Social Security Act is unlikely to be changed?

Hon. Members: No.

Mr. O'Malley: I am in communication with many of the most important organisations which are concerned with this matter in the pensions world, and my right hon. Friend will be making a statement to the House at the earliest possible opportunity, a statement which clearly has to be absolutely consistent with our policies in the past.

Sir Geoffrey Howe: This is a matter of importance to the House as well as to those concerned with the provision of pensions. I beg the hon. Gentleman to study seriously the speech that I quoted made by his former right hon. Friend, in particular the sentence:
If the swing of the political pendulum is to swing the pensions pendulum as well, we may be in for a period of quite appalling uncertainty.
Will the hon. Gentleman and his colleagues do everything possible as quickly as possible to end that uncertainty?

Mr. O'Malley: Certainly my right hon. Friend the Secretary of State will announce our decisions on our interim proposals affecting the Social Security Act 1973 at the earliest possible date. It would be going further than the contents of this Bill to say more.
In giving a second reading to the Bill, which I hope the House will do in a few moments' time, we shall be giving a Second Reading to one of the most important measures which the present Government will be introducing in this Parliament, because we are making a beginning with this uprating in transferring resources on a massive scale to the poorer and the older in the community. It is on that basis that I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Dormand.]

Further Proceedings stood postponed, pursuant to the Order of the House this day.

Orders of the Day — NATIONAL INSURANCE BILL [MONEY]

Queen's Recommendation having been signified—

Resolved,

That, for the purposes of any Act of the present Session to amend the provisions of the National Insurance Acts 1965 to 1973, the National Insurance (Industrial Injuries) Acts 1965 to 1973 and the Industrial Injuries and Diseases (Old Cases) Acts 1967 to 1973 as to the rate or amount of benefit and contributions, it is expedient to authorise the following payments out of money provided by Parliament—

(1) Such additional payments as result from—

(a) raising to £8·00 and £5·35 the rates of attendance allowance;
(b) raising to £6·00 and £3·70 the rates of retirement pension payable by virtue of section 1(1)(a) or (b) of the National Insurance Act 1970 or section 5 of the National Insurance Act 1971 or raising the weekly rates of the increases (where payable) for children or adult dependants.

(2) In connection with the increase of contributions under section 3 (flat rate contributions) of the National Insurance Act 1965 or under section 2(1)(a) of the National Insurance (Industrial Injuries) Act 1965, the payment of any resulting increase in the sums payable by way of Exchequer supplement under section 7 of the National Insurance Act 1965 or section 2(1)(b) of the National Insurance (Industrial Injuries) Act 1965.
(3) The payment to the National Insurance Fund, in addition to the Exchequer supplements under the National Insurance Act 1965, in respect of the financial year 1974–75 of the sum of £315 million instead

of the amount required by section 2(4) of the National Insurance and Supplementary Benefit Act 1973.
(4) Subject to the provision made by section 85 of the National Insurance Act 1965 for reimbursement out of the National Insurance Fund or by section 61 of the National Insurance (Industrial Injuries) Act 1965 for reimbursement out of the Industrial Injuries Fund, the payment of any increase attributable to the said Act of the present Session in the expenses of the Secretary of State for Social Services or any other government department which are so payable under either of these sections (any reference in this paragraph to section 61 of the National Insurance (Industrial Injuries) Act 1965 being taken to include that section as applied by section 13 of the Industrial Injuries and Diseases (Old Cases) Act 1967).
(5) Subject to the provision made by subsection (4) of section 46 of the Social Security Act 1973 for reimbursement out of the National Insurance Fund, the payment of any increase in the sums so payable under subsection (2) of that section in respect of the expenses and benefits mentioned in that subsection where the increase is attributable to provisions of the said Act of the present Session substituting a reference to earnings for the reference to prices in section 39(3)(a) of the said Act of 1973 or providing for an order made under the said section 39, in consequence of a review carried out in pursuance of that section in the year beginning on 6th April 1975, to come into force not later than the end of the week beginning with 28th July 1975.—[Mr. Joel Barnett.]

Orders of the Day — NATIONAL INSURANCE BILL

Bill considered in Committee, pursuant to the Order of the House this day.

[Mr. OSCAR MURTON in the Chair]

The Deputy Chairman of Ways and Means: Before I call the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) to move her amendment to Clause 1, I should like to draw the attention of hon. Members to the fact that an additional amendment has been tabled to the Bill. The amendment is new Clause 4, entitled "Increase of Death Grant" and is in the names of the hon. Member for Wells (Mr. Boscawen) and the hon. Member for Lancaster (Mrs. Kellett-Bowman). Typed copies of the amendment are available in the Vote Office, together with a printed list of amendments to the Bill. I have decided to select the new clause, which will be called immediately after the debate on Amendment No. 8.

Clause 1

WEEKLY RATES OF BENEFITS UNDER NATIONAL INSURANCE ACTS 1965 AND 1966

7.30 p.m.

Mrs. Knight: I beg to move Amendment No. 1, in page 1, line 12, at end insert:
'(2) A woman who has become entitled to any benefits under the Insurance Act and who ceases to be an employed or self-employed person in order to care, without payment, for a member of her family in respect of whom an attendance allowance is payable, and who thereafter ceases to pay any of the contributions which she is liable to pay under Part I of that Act, shall be entitled to benefits under that Act paid at the same rates to which she would have been entitled if she had continued, from the date of her ceasing employment for the purpose referred to above, to pay all the contributions for which she would have been liable'.
The amendment is an endeavour to help a group which has very few trumpeters on its behalf—the single women. Many disadvantaged groups are, paradoxically and happily, benefited because their disadvantage has been noticed, commented upon and acted upon by hon. Members on both sides of the Committee. But the unmarried woman is doubly disadvantaged as very few people seem to care about her predicament. Although the Secretary of State mentioned widows and other groups in her Second Reading speech, she did not mention spinsters. I am sorry that the right hon. Lady has left the Chamber and so will not hear what I have to say now on their behalf.
To make the case for the amendment I should like to cite a constituent who is an unmarried lady of almost 50. She lost her fiancé in the war, and shortly after the war her father died. Because her mother was in indifferent health, she felt it her duty not to leave home but to stay and look after her. For almost 30 years she has looked after her mother at the same time as doing a full-time job. It is not easy, and as her mother has become older and weaker the burden on my constituent has increased. She has to go off to work in the morning having tried to see that the old lady will be all right for the day while she is away.
One day a week my constituent has a home help, but apart from that the old lady is by herself for all the hours her

daughter is at work. My constituent is increasingly worried about her mother's condition. She has tried repeatedly over the past two or three years to find someone she can afford to pay to look after her while she is at work, but she has not been able to find such a help.
My constituent is a trusted and expert employee, with a salary of about £32 a week. She now faces the problem of having no alternative but to give up her job and stay at home to look after her mother, who is nearly 80. The difficulty is that she will be neither unemployed nor sick and, therefore, not capable of drawing any benefit on her own behalf. She will certainly not be self-employed. She will be classed as non-employed Class 3.
What is my constituent to do about paying her stamp? At the age of nearly 50 she recognises that in 10 years' time she will receive her pension, but unless she pays her stamp herself she will not receive the full pension. She is not too sure exactly what she will receive. Unfortunately, in dropping from a salary of just over £32 a week to nothing she will be in a serious situation and may be eligible for social security. She has not yet had the answer on that matter. I have not checked whether she and her mother own the house in which they live. If not, they may be eligible for rent rebate or help of some kind with the rent and rates.
All that is certain is that the income going into her house will be her mother's pension and the £6·20 attendance allowance. The attendance allowance is paid at the highest rate, because the mother needs care throughout the day and night. If my constituent's income is less than £520 a year, she can apply for a small income exception and then she can pay a Class 3 contribution. But that is £1·23 a week, which is quite a lot of money for my constituent to find in the circumstances in which she envisages she will he. She feels that she may well not be able to afford to pay that, even if—and there are many "ifs" in this case—she is eligible to come under that rule.
She still would not be covered for sickness or unemployment if she were to pay the £1·23. Within three or four years the old lady may die, and my constituent may seek another job. If she cannot find one—at her age it may not be all


that easy—she will not have covered herself by the £1·23 contribution if she becomes unemployed or sick. All that she will receive is her pension entitlement. If she cannot afford to pay at all from now on, leaving her work to look after her mother, I understand that at present rates her pension will be only £6·26 instead of the £7·75 for a woman of 60. On the basis of the Bill the figure for a single woman of 60 will be about £10, but she will draw only about £8 a week. Therefore, if she paid out the £1·23 every week as a Class 3 contribution all she would receive in benefit would be an extra 26p on top of the money she had paid in. That is a very hard position to be in.
Suppose that my constituent does not give up her job. Suppose she says "I cannot afford to give it up. I do not know how I shall live." She may apply pressure to social workers and others to get her mother into an old persons' home. The latest figures I could obtain for the cost of keeping a person in such a home are for the year 1971–72. The average figure in London was then £17·50 a week and in the provinces it was £16. It is probably much more than that now, and it will certainly be more in the future.
But this old lady is far from well and, therefore, may not be suitable for an old persons' home. Suppose she has a place in a geriatric hospital. The lowest 1972–73 figure that I could find for the weekly cost of keeping a patient in a geriatric hospital was £39·2. If she is in a geriatric bed in an ordinary hospital, as she might well have to be because of the pressure on beds in geriatric hospitals, the cost to the State will be £91·54 a week.
Therefore, I feel sure that hon. Members will readily accept my contention that my constituent is saving the State so much by looking after her mother at home that we should not be so mean and niggardly as to tell her that she must take a cut in her pension because of the duties she is undertaking for her mother.
I am convinced that there are many women who deserve and need our help and for whom little is done. We all acknowledge and accept that widows need help and we are glad to see what is being done for them in the Bill. However, single women have never had a husband to care for them or to provide for them. They have never had anyone

to manage their affairs for them, and very often a certain age group of unmarried ladies have elderly relatives to look after.
If the amendment were accepted—hon. Members will understand what I seek to do—we would not only actuarially be getting a good bargain by encouraging women to stay at home and to take on attendance duties instead of having to let their relatives go into homes and hospitals but we would be making a much happier home for the old lady and for my constituent.

The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris): I am grateful to the hon. Member for Birmingham, Edgbaston (Mrs. Knight) for providing the opportunity for the House to consider a problem of concern to all right hon. and hon. Members. The hon. Lady is eminently right to say that we rarely if ever discuss human problems of this kind with any sort of party animus.
The hon. Lady referred to my right hon. Friend the Secretary of State. I have been asked to say that she regrets having had to leave the Committee during this debate. She is away on ministerial duties and will return to the Committee as soon as she can. She will read what has been said by the hon. Lady with all her customary interest in human problems.
I am grateful to the hon. Lady for notifying me that there had been a change in her amendment. I understand her difficulties, but the amendment is still unclear. Its intention, which has now been explained, is to give credits to a woman who gives up work to look after a relative who is receiving attendance allowance, thus enabling her to retain her entitlement to full benefits, notably retirement pension. The amendment is technically defective.
We have not been able to estimate the cost of the amendment. The provision of credits for women who give up work to look after sick or elderly relatives is one of the objectives of the National Council for the Single Woman and her Dependants. The council also urges the provision of a cash benefit for a woman in that position. I am familiar with the council's work and its aims, and I believe


that the Committee will agree that it provides a useful service.
At present a woman in the position which the hon. Lady has described can claim supplementary benefit, which can include the cost of a non-employed person's contribution. The latest figures show that 10,000 women in that position are receiving supplementary benefit. In addition, there are are some 4,500 men. As the full rate of retirement pension is payable when the person's contribution record averages 50 a year, it is possible for a woman to qualify for a full pension even though she has missed paying a number of contributions.
The approach which successive Governments have adopted is that giving up work to meet attendance needs is not an insurable contingency and that supplementary benefit, without the usual requirement to register for work, provides an appropriate and flexible means of helping those daughters or other close relatives who stay at home to provide care and attention.
7.45 p.m.
The review of social security provision for the chronically sick and disabled that is currently in progress includes the circumstances and needs of their families. This review is being carried out under Section 36 of the Social Security Act 1973 and my right hon. Friend is required to report to Parliament by 31st October 1974. In the circumstances it would be premature to attempt to deal with one small part of the problem in isolation. Those who have the interests of this deserving group at heart can reasonably be asked to await the comprehensive report which will be presented.
What the hon. Lady has said will do a great deal to inform opinion outside the House. We are deeply pledged to meet the requirement of Section 36 of the Social Security Act 1973. In the circumstances I hope that the hon. Lady will agree to withdraw her amendment. She knows of my personal interest in the problem. I think she will appreciate that I am working extremely hard to meet the requirements of Section 36 of the Social Security Act 1973.

Mrs. Knight: I shall be perfectly happy to seek to withdraw the amendment. I intended not to cause a vote but to bring

the problem to the notice of the House of Commons. I take on board the point that the Minister has made—namely, that men are sometimes faced with similar circumstances and that the amendment refers only to women. I know of men giving up their jobs to look after their wives. It would be wrong if they did not receive help. It is true that arrangements are made, as I described them under Class 3, for my constituent and others like her to pay a £1·23 stamp, but that does not cover the lady for all benefits. That is one of the points which perhaps the Minister will be kind enough to consider. Having had his assurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2

CONTRIBUTIONS UNDER NATIONAL INSURANCE ACT 1965

Sir B. Rhys Williams: I beg to move Amendment No. 2, in page 2, line 15, at end insert:
'(2) In section 3 of the Insurance Act there shall be inserted after paragraph (c) the following proviso—
Provided that any self-employed person to whom this paragraph applies may, on proof of his average weekly earnings in any financial year, exercise an option to pay a total contribution in respect of that year of a sum not greater than twice the amount of the combined graduated and flate rate contributions that he would have paid if he had been an employed person with the same earnings".'
The object of the amendment is to draw attention to the problems of the self-employed. The formula that I have adopted, which has the effect of reducing the contributions which the self-employed on low incomes will be required to pay, makes the appropriate gesture to the self-employed in order to correspond more or less to what I calculate to be the effect of the combined changes in the flat-rate and the earnings-related contributions which apply to employees in the contracted-out section of the National Insurance Scheme. I am not certain whether I should have applied the formula to the contracted-out or the contracted-in, but I hope that the Committee will forgive


me, particularly in view of the time available, if I do not go more fully into that.
My object is that self-employed workers on low incomes should have a way of reducing the amount of the burden imposed on them by the flat-rate contribution. Had the House not been under such pressure I would have spoken on Second Reading and would have asked the Minister to give us the Department's thinking about the relationship between contributions and benefits, in particular the Secretary of State's thinking of earnings-related contributions and flat-rate benefits and the whole rôle of flat-rate contributions in the future of national insurance.
I tabled Questions to try to elucidate what Government policy was on this and received only evasive and unsatisfactory replies. I am an enemy of flat-rate contributions and always have been for reasons which I have gone over in the past and do not need to elaborate now. Flat-rate contributions for the self-employed are a particularly heavy burden because so many are on low incomes in any event. In some ways the object of the Bill appears to be to aggravate the disadvantages of the self-employed on low incomes. All of them have to pay the increase of 42p in the case of a man over 18 and 34p in the case of a woman over 18, bringing their rates to £2·41 for a man and £2·01 for a woman.
For a man whose total income is perhaps £18 to £20 a week such an exaction is an extremely heavy burden. We ought to consider the plight of the self-employed low paid just as much as we consider the plight of the low-paid employee when we are adjusting the burden of contributions to national insurance from time to time. The Government tend to forget the self-employed because they do not belong to trades unions and are not able to exert pressure on a Labour Government, yet there are about 1,800,000 of them. I believe, although I have no evidence for this, that the great majority of them have incomes below the national average wage of £40 a week. It is wrong that we should continue to impose the heavy burden of a flat-rate contribution on the self-employed without attempting to soften the edge at all, even for those whose earnings are very small.
If they are forced out of their gainful occupation because they cannot meet their contributions, we do not know what may become of them. They may not have the sort of skills or aptitudes which enable them to make a satisfactory career as employees. So they may be a far bigger burden to society and a serious social problem if we make it impossible for them to continue to meet their contributions. In this Bill the Government are taking an important step along the road to forcing many self-employed people out of the gainful employment by which they manage to survive and making them into a social problem.
The Bill takes further forward the process, to which I have often drawn attention, of what I call the "gipsification" of the self-employed. I hope that I shall receive a sympathetic comment from the Minister about the intention of the amendment. I do not intend to press it to a Division because much more attention needs to be given to the precise basis on which we exact contributions to national insurance from the self-employed. I express my conviction that the present basis is wrong and that the increase the Government are proposing is unjust and will cause hardship.

Mr. Raison: I believe that my hon. Friend the Member for Kensington (Sir B. Rhys Williams) has put forward a good point. While I appreciate that he does not wish to press the matter to a Division this evening, I hope that the Government will take this seriously in their consideration of future policy. There is no doubt that some self-employed people on low incomes can be badly hit by these new proposals.
I quote from a letter received by one of my hon. Friends which makes the point very well. The letter came from a rural dean writing on behalf of his clergy and protesting at the new contribution rates. He said:
Although taxed through PAYE we are classed as self-employed. The new rates will take a considerable slice from what are already minimum incomes.
Anyone who knows the sort of level of income which the clergy of the Church of England, and perhaps even more of the Nonconformist churches, are receiving will realise that this new measure imposes a considerable burden upon


them. I ask the Minister to take the problem seriously.

Mr. William Wilson: I should not like it to be thought that only Conservative Members of the Committee are concerned about this problem. Anyone who understands the needs of the self-employed will appreciate that under our national insurance provisions such people quite often get the wrong end of the stick. The self-employed person is not able to qualify for unemployment pay in the ordinary way. I should like my hon. Friend to tell us what is the Department's thinking about the self-employed person. There is no doubt that grave injustice is often done to folk who are not able to provide in the ordinary way of business for pensions, sick pay and so on. If it is possible to arrange a system whereby contributions can be paid into a national scheme a need will have been met.

Mr. Robert C. Brown: I am grateful to the hon. Member for Kensington (Sir B. Rhys Williams) for the way in which he moved his amendment and the indication which he has given. I take the points made by the hon. Member for Aylesbury (Mr. Raison) and my hon. Friend the Member for Coventry, South-East (Mr. Wilson). I do not believe that there is any monopoly of feeling for the low paid, whether self-employed or employed by some major undertaking.
The amendment is clearly aimed at relieving the low paid self-employed person of some of the contribution liability. We would all accept that this is a worthy aim. The contribution for a self-employed man under the Bill is £2·41 a week. A self-employed man with a weekly profit of approximately £17 would, under the proposal of the hon. Gentleman, pay £2·40—that is twice the proposed employee's contribution of 75p; namely £1·50, plus twice the graduated contribution of 45p, which is 90p. The profit level at which a self-employed person may claim exception from contribution liability is set out in the Bill at £650 a year; that is, about £12·50 a week. Since the amount of the contribution may, among other things, be excluded from the calculation, this means that a profit of £14·91 a week can bring exception. I find it difficult to accept the

amendment, and I am glad that the hon. Gentleman is not pressing it—

Sir B. Rhys Williams: Is the hon. Gentleman assuming that the comparison is with an employee who is not contracted out? I find it difficult to be certain where the most honest comparison would be; but the object of my amendment was to taper the flat-rate contribution of the self-employed from about the same point at which the contributions are tapered for employees as a result of the Budget and the Bill.

8.0 p.m.

Mr. Brown: The hon. Gentleman is right; I am speaking of a not-contractedout individual. I was about to say that I found it extremely difficult to accept this amendment for a number of reasons. First, contributions of self-employed people are payable weekly. Fresh legislation would be needed to remove this requirement if it were possible to exercise the proposed option after the end of the contribution year. In many cases this would be long after the end of the year, since profits may not be determined for several months—often not until many months after the end of the individual's business accounting year, and it is most unlikely that that would coincide with the period over which contributions were required to be paid.
Secondly, the administrative complications implicit in introducing a variable rate of contribution for a self-employed person retrospectively and of his choice would, in themselves, rule out such a provision.
Finally, as the small income exception arrangements would reduce the numbers who could benefit financially from the amendment to the narrow band of profit of between £15 and £17 a week, there would seem to be very little to be gained. I am therefore grateful that the hon. Gentleman is to withdraw his amendment.

Sir B. Rhys Williams: I think that the hon. Gentleman has not taken the point made by Members on this side and hon. Members opposite. It is that this is a problem that needs the attention of the Government, and the Bill is aggravating it seriously. I sought to be in order and sought to make only a modest gesture


in the right direction which could not be ruled out on the ground that it would upset the finances of the national insurance system too much to be acceptable. The problem remains and has to be tackled.
This is a job with which we expect the Minister to deal, in view of what is being said and in view of the aggravation of the problem as a result of the Bill. I hope that he will give the Committee an assurance that it will be studied and that a way will be found of relieving the burden of flat-rate contributions on self-employed people with low incomes. We shall not be satisfied if we do not have that assurance.

Mr. Brown: Naturally, my right hon. Friend and I will consider what has been said. We all want to study the issue, and I hope that in our long-term proposals we shall be able to deal with the matter. I cannot give any absolute undertaking but I shall certainly confirm that we intend to look further at the matter.

Sir B. Rhys Williams: In view of the Minister's concluding remarks, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Clause 4

RELAXATION OF THE EARNINGS RULE

Sir B. Rhys Williams: I beg to move Amendment No. 3, in page 4, line 7, leave out '£13' and insert '£90'.

The Deputy Chairman: With this amendment we are to discuss new Clause 1 (Repeal of the earnings rule)—and Amendment No. 12, new Schedule (Amendments consequential on repeal of earnings rule). Both stand in the name of the hon. Member for Kensington and Chelsea (Sir B. Rhys Williams).

Sir B. Rhys Williams: Once again I shall try to be as brief as possible in the circumstances in raising a subject that has often been raised in the House by hon. Members of all parties and that leaves all of us extremely unhappy. I am sure that that applies to hon. Mem-

bers on the Government side as much as to Opposition Members.
The object of each of my amendments is in effect the same, but I tabled the one I have moved which raises the point of application of the earnings rule from £13 to £90 a week partly for procedural reasons. I did not choose the figure of £90 simply out of the air; broadly speaking, in weekly terms it is the point at which a taxpayer runs into the higher rate of tax as a result of the changes proposed in the Budget, and, therefore, it is the next crossover point at which a new event takes place in the taxpayer's relationship with the Community. I thought that a reasonable resting place for the earnings rule for the time being.
For procedural reasons, I did not want to move the abandonment of Clause 4, to leave it out of the Bill altogether and to substitute new Clause 1, which abolishes the earnings rule, because we might have been stuck with the removal of Clause 4, which is a gesture in the right direction, and unable to secure the inclusion of the clause that I was proposing should take its place. The result of my efforts might have been to leave the situation as it is, instead of improving it slightly, which is what the Government are trying, commendably, to do.
If the earnings rule and its application are to be amended, it is proper that we should examine exactly what it is doing in our national insurance system, if we can. I believe that this is a blot on the national insurance system and, as far as I have been able to ascertain, one not found in, for instance, continental countries, which operate pension schemes on broadly similar lines to our own.
In France and Italy, I believe, most pensioners are exempt from any application of a rule of this kind. In Germany there is an earnings limit, but only for pensioners up to the age of 65. After that age the limit does not apply and those below the age of 65 are allowed earnings of 800 Deutschemark a month, which is double, or more, even the new rate, assuming that the Committee approves the Government's proposals.
Obviously, this feature is crying out for special consideration, and I think that the Committee should study it, even


if only briefly, tonight. By what right do we insist that certain pensioners must lose their entitlement in certain circumstances? What is the basis of entitlement for the national insurance pension?
I have often asked whether it is need, contributions or citizenship. From the miserable statements that Ministers are put up to make by the Department, whatever party is in power, it is nothing to do with need, contributions or citizenship, but the retirement benefit has to be related to proof that the pensioner has in fact retired.
That rule—if it is the rule—seems to be shot to pieces in terms of actual practice. It defies social justice, because when a man has earned his pension by a life-long record of contributions, why should he lose his entitlement when he seeks to make a further contribution to society after he has reached the age of 65–60 for a woman—by continuing at work? It seems atrociously unfair, and I am sure that the vast majority of pensioners and, indeed, all members of the national insurance system, feel thoroughly uneasy and unhappy about it.
What seem anomalous is that the rule does not apply to men over 70. Why not? If what they have to do is prove that they have retired, why does the rule apply only to men of 65 to 70 and then lapse? I am not complaining that it lapses, but I point to it as an inexplicable anomaly. The same is true of women who continue to work after the age of 65. That is something which the Department cannot explain.

Mr. O'Malley: I understand the amendment which the hon. Gentleman is moving and I have looked at it carefully. The most useful thing I can do before the hon. Gentleman deploys the arguments, which he has put so well in the past—and he knows that I respect his knowledge and integrity in this matter—is to quote what my right hon. Friend the Secretary of State said in Standing Committee on the Social Security Bill on 27th February 1973 precisely about the abolition of the earnings rule:
All of us stand back a little warily from total abolition at this stage, on no other principle than that of cost—which is really the only principle involved. We hesitate to pre-empt £100 million as a priority at this

stage—or £115 million, as the hon. Gentleman said."—[OFFICIAL REPORT, Standing Committee E, 27th February 1973; col. 690.]
The cost at the moment would be about £160 million, at a time when there is enormous competition for the deployment of public financial resources. I know the hon. Gentleman well enough to be able to say that I am sure that he will bear that in mind.

Sir B. Rhys Williams: I am grateful for the hon. Gentleman's attempt to be helpful. In fact I have before me the same quotation and I intended to come to it in due course. Perhaps I may throw back to the hon. Gentleman a very old saying,
Honesty is the best policy ".
Although that may have a rather cynical ring, I believe that it applies just as much to government as to business, and it applies particularly in national insurance because there is an alienating effect when the contributors and beneficiaries feel that they are not getting a fair deal. This is one of the points where beneficiaries of national insurance feel that they are not getting a fair deal.
I should like briefly to point to another of the anomalies that make the whole arrangement seem such a contrivance. The earnings rule does not apply to pensioners who have investment income. They may have as much investment income, I believe, as they like without incurring loss of their pension entitlement. It is only if they actually seek to contribute to society by working and earning that they lose it. This is especially bitter for someone who wishes to maintain a reasonable standard of living in retirement and has perhaps to compare himself with a neighbour who has income from investment, whereas he cannot catch up by working even if he tries.
Also, it applies only partially to those who have small earnings. The House has chiselled away at this anomaly, and, because hon. Members dislike it so much, Governments have had to recognise the feeling of hon. Members and have had to phase the application of the earnings rule instead of having a deadline. By accepting the necessity for phasing, they have accepted that there is no justification. Also, of course, there are special rules for the self-employed, which also points to the fact that there is no guiding


principle behind this rule. The House is being asked by the Department and the Treasury to accept something inexplicable and wrong.
The hon. Gentleman quoted the speech by the right hon. Lady in Standing Committee. I well remember it because I too contributed to that debate. He did not quote her further remarks, which appeared in the same column of HANSARD and dealt with increments for deferment. One of the options open to a man or woman of pensionable age who wishes to contribute to his or her business, or to continue to earn, is to defer his or her retirement and to get the so-called actuarially-adjusted benefit a few years later. This is such a shaming fraud that when I tried last year to elicit from the Department the actuarial basis on which this figure was calculated. I received an evasive reply.
I now come to the quotation from the right hon. Lady. She said:
The increments for the deferment of the time of retirement are a very bad deal for the pensioner. … It has been a fraud."—[OFFICIAL REPORT, Standing Committee E, 27th February 1973; c. 690.]
Of course, anybody who examines it must agree with that. The pensioner does not really have the option, which is supposed to exist, of deferring the date of retirement, because if he does he simply loses benefit and gets only a fraudulent increase in exchange.
The hon. Gentleman tried to inform the Committee about the costs of acceding to the sort of proposal that I am now making. We hope to compare what he said with what was said by the then Under-Secretary of State, my hon. Friend the Member for Somerset, North (Mr. Dean):
The cost to the National Insurance Fund, including the loss of contribution income, is estimated to be about £135 million a year.
It is now a larger figure because of the higher benefit. My hon. Friend went on to say:
The cost will arise mainly from paying pensions to over 200,000 people who, together with their wives, are not yet drawing pension because they still have regular and substantial earnings. Allowance is made for savings on sickness and unemployment benefit which would no longer be paid. On the basis that the pension would be taxed if paid in full on top of earnings the amount likely to be collected in income tax would be about £35 million."—[OFFICIAL REPORT, 22nd January 1974; Vol. 849, c 1437–38.].

I challenge that figure of 200,000 and I challenge the entire basis of the estimate on which that figure of £135 million, or now £160 million, was made. What other considerations ought to be taken into the calculations? For instance, what effects would it have on the conduct of pensioners who now make no effort to work if the earnings rule were totally abolished?
8.15 p.m.
If there are as many as 200,000 pensioners who would benefit, what about all the others? There are 1,220,000 men between 65 and 70 and 1,702,000 women between 60 and 65. That is a total of nearly 3 million. There are also people entitled to benefits under other aspects of national insurance where the earnings rule applies. Are we trying to convince ourselves that of 3 million people within five years of retirement age only 200,000 would seek to work if the earnings rule were abolished? It does not make sense.
What study have the Government made to ascertain the readiness to undertake work of all pensioners who do not undertake work at present? I put that down as a Parliamentary Question but received a reply on 8th April which showed that no study has been done at all. The Minister of State said that he would
consider whether it might be useful to make such a study".—[OFFICIAL REPORT, 8th April 1974; Vol. 872, c. 45.]
I cannot help wondering whether that parliamentary reply went through without the hon Gentleman having seen it, because the tone of the reply implies that he does not care very much. I know him well enough to know that that is not so. But it does not look well in print, as he is bound to admit.

Mr. O'Malley: The parliamentary reply to which the hon. Gentleman refers did not go through without my seeing it. I saw it and considered it very carefully. The hon. Gentleman will know that there was an inquiry into the subject from 1966 to 1967 and I thought it right that I should have time to look at the conclusions reached in that report and the general implications before deciding whether to use manpower to carry out another inquiry when one had already been carried out. I am not unsympathetic to the kind of research the hon. Gentleman mentioned. The more we


know about this area, the more helpful it is in the formulation of any future Government policy.

Sir B. Rhys Williams: I am grateful for the hon. Gentleman's intervention, but there is still much more to be studied which perhaps does not fall within the ambit of his Department.
I tabled a Question to the Treasury and asked what proportion of pensioners concealed their earnings to avoid the double blow of losing their pension and paying tax. If it becomes known that some people have earnings which result in their losing their pensions, they will also be liable for tax on them. That double blow makes it unattractive to go out to work. The reply I received from the Treasury on 8th April was that it was not possible to make an estimate. The Treasury obviously has not made a guess as to what the extent evasion is, but we all know that it is widespread.
What is the effect on the total national income? The Treasury is not the only consideration here. The country must be considered too, and there is also the effect on the national income if we had the benefit of the work contributed by people at present pushed into idleness by the operation of the earnings rule. We might also consider the loss of income tax which does not accrue because people do not earn. The Treasury's answer was that there was no information on which estimates could be based.
The categorical assurance given periodically to the House that nothing can be done about the earnings rule because the figures make it quite impossible is based on a sham. The Departments concerned have not done the necessary work to ascertain whether the position is true or false. There is the usual stonewall opposition, and Ministers are advised to oppose the relaxation of the earnings rule because the Department has set its heart against it.
I think there is an extremely dangerous situation arising, which one could call an alienation or many other things, in which taxpayers and contributors to national insurance and beneficiaries feel that they are getting such a raw deal from society in that they are being asked

to contribute too much and getting too little in exchange. There are dangerous social effects in continuing to defy public opinion in a matter of this kind. I think we must warn the officers at the Treasury and at the Elephant and Castle that they cannot continue with this game for much longer. They will have to examine the case much more convincingly if they are to carry the Committee with them.
I do not intend to ask the Committee to divide on this matter tonight, because I have not had satisfactory evidence one way or the other as to what the true effect of the earnings rule must be. I hope I have said enough, however, to show the sort of questions that ought to be examined on this important question. The Department has no idea what the effect of abolishing the earnings rule will be on the supply of labour, the national income, the whole problem of tax evasion or the potential yield of tax and, therefore, the true cost to the Exchequer and to the nation. Hon. Members know that the rule is indefensible, unpopular and widely evaded.
Once again, I must implore the Minister to tell the Committee that it is the Government's intention to get rid of this earnings rule altogether at the first possible opportunity.

Mr. Kenneth Clarke: I am glad that my hon. Friend the Member for Kensington (Sir B. Rhys Williams) does not propose to ask the Committee to divide on his amendment, because I would feel unable to support it, having listened in Committee in the past on these Bills and been persuaded by what he described as the "stone walling arguments" of successive Ministers on the cost of the change of abolishing the earnings rule totally at the moment. Although I shall study my hon. Friend's arguments with care, I am not anxious this evening that we should be pressing for changes which would incur such considerable extra costs as I think the Minister is about to tell us about.
In replying to my hon. Friend, however, I hope that the Minister will admit the serious problem underlying this amendment and the fact that a slightly wider principle is raised about the reactions of the public generally to the national insurance system, which Governments must face up to at some stage.
It appears to many members of the public—I believe with some justification—that successive Governments, in progressively easing the position of the totally destitute and those who are wholly dependent on the State, have begun to build up a sense of grievance amongst those of modest means, whether those means are saved or earned, and one must guard against the position where thrift or small part-time working in retirement are discouraged. On later measures we will raise the question of the extremely low level of disregards in assessing supplementary benefit and the provisions of the Finance Act which have lowered the threshold for the surtax surcharge on small sums of unearned income for those in retirement.
I hope, therefore, that the Minister can give some encouraging words to those on pension affected by the retirement rule, and perhaps in rejecting my hon. Friend's proposals he could consider two other matters which he might be able to introduce in another place which would go some way towards easing the effect of the earnings rule to a slightly greater extent than the welcome changes he has already made in the Act.
First, there is the phasing mentioned by my hon. Friend. When it was introduced, the phasing was an extremely welcome improvement, so that only 50p in the pound is deducted at a certain level, and under the proposals of this Bill as I understand it £13·50 of earnings onwards will find only 50p in the pound deducted until £25 is reached. I believe that 50p in the pound is a savage degree of phasing. When one bears in mind that on that level of earnings going up the scale someone is probably going through the loss of other means-related benefits by way of help with the rent or the rates, a 50 per cent. tax in effect upon the national insurance pension is regarded as extremely punitive, and I hope that the Minister will be able to give some reassurance about the possibility of stretching out this phasing, and introducing more steps before the pension right is totally extinguished by comparatively modest earnings.
I draw the Minister's attention to my Amendment No. 6, which, I am told, is out of order, as a much more substantial amendment will be required to bring about the change I wish; namely, to

bring the earnings rule within the ambit of those benefits which have to be considered by the Government in the annual review. I will not quote to the hon. Member what he said in Committee, but I remember the passionate speeches made by the Secretary of State and himself when they pleaded that the earnings rule should go into the annual review. Now that the Minister has made the change to basing the annual review on average levels of earnings, logic demands that the earnings rule in pensions should at least keep pace with that and be kept in line with the other levels of benefit, in order that we can be guaranteed that the earnings rule will not get any more punitive in future years. I hope that the Minister can make some encouraging remarks on that in his reply.

Sir G. Howe: I join my hon. Friend the Member for Rushcliffe (Mr. Clarke) in welcoming the fact that my hon. Friend the Member for Kensington (Sir B. Rhys Williams) has raised this subject. Although the whole Committee welcomes the relaxation embodied in Clause 4, I believe that we cannot too strongly underline the extent to which right hon. and hon. Members on both sides remain discontented with the existence and operation of the earnings rule.
My hon. Friend the Member for Kensington brought expert knowledge to bear on his analysis of the problem. I do not want to go over the ground again, but I have increasingly come to believe, when considering this subject in and out of office—although not with any direct responsibility for it—that there is a degree of mythicality about some of the figures, such as they are that are quoted within, and thereby by the Department and the departmental spokesman in the information given in the Written Answer on 8th April of this year to my hon. Friend the Member for Kensington. The estimate of 20,000 retirement pensioners whose pension is now reduced or extinguished on account of their earnings has always struck me as particularly implausible; and most of the other figures are simply non-existent.
I recognise what the Minister of State said about his own answer; namely, that he will consider whether it might be useful to make such a study. It may well be that that bold assertion represents a


triumph of ministerial will over an otherwise inert departmental recommendation. I know not, and I would not wish to press him too far to disclose, what happened.
There has been a degree of durability about the earnings rule, about the figures that are quoted in support of it, and the arguments in support of it, which is truly remarkable. I sometimes wonder whether some humble member of the secretariat of the Beveridge Committee now lingers on in a corner of Alexander Fleming House as a bearded deputy secretary, long past retirement age, notwithstanding the provisions of the earnings rule, churning out the same arguments to Minister after Minister in response to Opposition after Opposition.
I regret that the Government's policy of indiscriminate benefit in other fields may go further than we would like towards preventing them making even modest further changes in the earnings rule. I accept, if anyone is to accept the figures given, the figure for total abolition quoted by the Minister of State. If that figure is to be accepted, the difficulties are increased and made greater by the extent to which other indiscriminate benefits are deployed.
The figures are doubtful. There is undoubtedly evasion, which brings diminishing respect for the law and the National Insurance Scheme. There is undoubtedly a reduction in the totality of national wealth from continued insistence on the retirement conditions, 32 years after Lord Beveridge produced his report.
What is almost more important is that the impact of the earnings rule seems to be increasingly out of tune with the kind of social posture we ought to be adopting towards the desirability of keeping older people in work, rather than out of work. I do not mean keeping them in work perforce, but making it possible, and encouraging them to retire gradually and gracefully and to remain at work. It is a different approach, which commends itself as much to right hon. and hon. Members opposite as it does to me.
For the reasons given by my hon. Friend the Member for Kensington, it is clearly not possible to vote in support of this amendment tonight. However, I remind the Committee of our own party's

commitment in the manifesto on which we fought the previous General Election:
We shall continue to relax the earnings rule during the next Parliament. Our ultimate objective is to abolish it altogether.
It is an objective shared by both sides of the Committee, and I hope that the right hon. Lady and her right hon. and hon. Friends will not look askance at us if we return again and again to this subject, pressing them to press those who advise them to dig deeper into the figures, analyse the arguments more closely and see how much faster and further we can go. I welcome the opportunity of placing on record my party's position on this matter.

8.30 p.m.

Mr. Robert C. Brown: I know that the hon. Gentleman the Member for Kensington (Sir B. Rhys Williams) does not like departmental dogma, but as he knows, the reason for having an earnings rule is that the pension is a retirement, and not an old-age, pension. If a person has to retire—

Mr. G. B. Drayson: Was not this view insisted upon by the trade union movement when the 1946 Act was passed? The unions were afraid that employers would employ old-age pensioners to the detriment of young people. That situation has now gone by. Have they altered their attitude to it since then?

Mr. Brown: I do not defend the earnings rule on principle, but the fact is that it is a retirement pension. I am quoting a bit of departmental dogma to the hon. Gentleman and he does not like it. But there is really not much between us on this issue. What matters is the cost of abolition. The right hon. and learned Gentleman talked of the Conservative Party's commitment in the election manifesto. It is true that it undertook to continue to relax the earnings rule and declared that its ultimate objective was its abolition. But he knew, as I do, that abolition would cost something like £160 million a year. He also knew that when the last Government had the opportunity to relax the rule in 1973, they did nothing about it. Indeed, in 1972 the slight relaxation in the earnings rule was forced upon them by a Private Member's Bill.

Sir G. Howe: The position is now different. The Government have chosen


to spend almost as much as it would cost to abolish the earnings rule to reduce the price of milk by 1p a pint. I would seriously argue that there would be far greater joy and far greater social advantage throughout the country if any Government were to come forward and abolish the earnings rule instead of producing a generalised subsidy of that kind.

Mr. Brown: The right hon. and learned Gentleman cannot use the milk subsidy in support because his own Government also subsidised milk, as he knows. The extra penny affords benefit right across the board, mainly to people with children. It is up to us as a Government to determine the priorities. But if we talk of spending £160 million at this stage to abolish the earnings rule, many hon. Members would agree that if we have such sums to play with there are more deserving cases—for instance, the disabled—on which to dissipate the £160 million, rather than simply on the 220,000 persons—and their 120,000 dependent wives—who are in full-time employment.

Sir B. Rhys Williams: Is the Minister accepting this figure of £160 million absolutely without criticism?

Mr. Brown: No, I am not accepting anything without criticism at all. But the fact remains that these were the figures that the previous Government were working on. I should hardly have thought that it was either fair or reasonable—the hon. Gentleman is normally a fair man—to suggest that within a month of taking office as a minority Government we have had time to get down departmentally to study whether the £160 million is £200 million or £100 million.
The hon. Member for Kensington pointed out the difference between investment income and earned income. There may be something in his point, but national insurance benefits are, in general, given to compensate for an interruption of employment—which in this case results from the person's retirement. But to take all personal income into account in deciding a person's entitlement to retirement pension would make the pension a means-tested benefit. That would undermine the contributory nature of the scheme.
The hon. Member for Kensington talked about the extra numbers of people who would be coming into employment.

It is a matter of opinion how many more people would come into employment. I am sure many hon. Members would question the desirability of more people over 65 coming into full-time employment. But whether the abolition of the earnings rule was economically advantageous to the country would depend on the number of pensioners who subsequently took up work. It is by no means certain that, however abolition of the rule were made effective, it would result in a large increase in employed pensioners.
I pray in aid the report of the National Insurance Advisory Committee dated January 1967. About the earnings rule the report says the committee was:
… doubtful whether it is realistic to suppose that there is any adjustment to the earnings rule which in itself would lead to any substantial addition to the number of elderly people in employment … but it thought it was likely that increases in the limit do result in somewhat more work being done by some pensioners.
That is, by those pensioners already in employment.
I have fairly well covered the points that have been made. I am pleased that the hon. Gentleman is not pressing his amendment to a Division because naturally we take on board all that has been said in the debate. I return to the point that it is the actual cost and priority that decide where the money goes.

Sir B. Rhys Williams: The Minister has not given me the assurances that I asked for. He has given a large number of arguments which, no doubt, will be used by Conservative canvassers.
The case against the earnings rule seems to remain intact. I can only conclude by warning the Department that the time will come soon when the House of Commons will not support this sort of claptrap any more. The Government will have to prepare for an early day when the earnings rule must be abolished, because neither side of the Committee, I am sure, is prepared to stand for this situation much longer.
I said that I would not press the amendment to a Division, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5

AMENDMENT OF SECTION 39 OF THE SOCIAL SECURITY ACT 1973

Mr. Raison: I beg to move Amendment No. 5, in page 4, line 24, after 'word', insert 'adult male industrial'.
This is a probing amendment, but it is important because it enables us to try to find out in a little more detail exactly what lies behind the decision taken by the Secretary of State to replace prices by earnings in the section of the 1973 Act with which we are dealing. Section 39 of the 1973 Social Security Act leaves it to the Secretary of State to estimate
general levels of prices and earnings in such manner as he considers appropriate.
That refers back to the issue under discussion. It is true that it is not too difficult to assess how prices may be fixed, because we have the retail price index.
Now that the emphasis is to be on earnings, there appears to be a problem. The Secretary of State said in the Budget debate on 28th March that we must link pensions increases in future to the movement in average national earnings so that pensioners can be guaranteed a continuing share in our increasing national prosperity. Today the right hon. Lady has reiterated that claim. It is an important part of what the Government are setting out to do in the Bill.
In practice, the use of earnings as a yardstick is not new. It is a fact that between 1970 and 1974, the period of the previous Conservative Government, pensions went up faster than both prices and earnings. Between June 1970 and January 1974 the level of prices was up by 37 per cent., earnings for all workers were up by 45 per cent. and pensions were up by 55 per cent. Therefore, over that period the increase in pensions was greater than the increase in both earnings and prices.
The first purpose of our amendment is to clarify exactly what is meant by "earnings", which is to replace "prices" in Section 39(3)(a) of the Social Security Act 1973. Section 39 states at the end that the Secretary of State
shall estimate general levels of prices and earnings in such manner as he considers appropriate having regard to the objects of the review.

I wonder whether we should not now be rather more specific, given the importance of the new proposal. I assume from the Secretary of State's words in the Budget debate that the right hon. Lady has in mind that pensions should be linked to all earnings, as opposed to male industrial earnings. I submit that that entitles us to ask exactly what yardstick the Secretary of State proposes to use in assessing the level of earnings. It might be the so-called new earnings survey. It might be the October earnings inquiry, or it might be the monthly earnings inquiry.
I remind the House that those three surveys have different characteristics. The new earnings survey is an annual survey taken in April based on returns from employers concerning a random 1 per cent. sample of employees. Both manual and non-manual employees are covered. Separate figures are obtained for adult males of 21 and over, adult females of 18 and over, and juveniles, and a distinction is made between full-time and part-time employees. That is the first of what seemed to me to be the possible yardsticks.
The second is the Department of Employment's October earnings inquiry. Since the introduction of the annual new earnings surveys, the departmental inquiry has been taken only in October of each year. The survey covers manual workers only, but the results are published separately for adult males, adult females and juveniles, with a distinction being made between full-time and part-time employees.
Thirdly, there is the monthly inquiry into average earnings. Actual earnings figures are not published, but a monthly index is compiled from the information obtained from employers in the production industries, transport and communication and certain miscellaneous services. Manual and non-manual employees are covered and no distinction is made between males and females, or between full-time and part-time workers.
8.45 p.m.
There are three possible criteria that the Secretary of State may have in mind. It is important to try to establish for the record the basis of calculation. It is also important to ask at what time of the year the calculation will be made as the increases now are to be in July. These


surveys are taken at different times of the year and a particular time may have a considerable bearing on their meaning when we consider that July is to be the moment of the increases.
I understand that hitherto when information has been given in reply to Parliamentary Questions, and so on, about the relationship between average earnings and social security benefits the measure invariably used has been adult male manual earnings from the October inquiry. Our amendment suggests that adult male industrial earnings should be the yardstick. I am not arguing that this is necessarily right. We simply put it forward because it is necessary to put forward some proposition to have the matter debated. The yardstick that we have put forward corresponds most closely to the October inquiry, but we are not pressing that it should necessarily be that one, nor that it should necessarily be tied to male earnings. We want the Government to define what they have in mind.
There is another point on which we would like some elucidation from the Government. Despite the high-flown words which have been spoken about this new commitment to keep pensions rising relative to average earnings, it seems to us that the clause is largely window dressing. I should like to explain why this is so. It is essentially because it amends only Section 39(3)(a) of the Social Security Act 1973, which provides:
In the course of a review of social security benefits under this section, the Secretary of State shall consider—
(a) the extent to which current rates appear to him to have retained their value in relation to the general level of prices obtaining in Great Britain from time to time since the beginning of the year in which this section first came into force or, as the case may be, the end of the period to which he had regard for the purposes of the last review under this section".
The proposal is to delete "prices" and to substitute "earnings".
I understand that subsection (3)(b) will remain in the Act. That provides:
apart from the considerations of paragraph (a) above, whether any of the rates ought to be increased having regard to—

(i) the general level of prices and earnings obtaining in Great Britain at the time of the review,
(ii) the national economic situation as a whole and the general standard of living, and

(iii) such other matters as the Secretary of State thinks relevant to his review of benefits".
If subsection (3)(b) remains in the 1973 Act it is evident that we already have power to take into account the general level of earnings obtaining in Great Britain. That power is specifically conferred by the subsection that I have just read.
It is also evident that there is what might be called a get-out clause—
the national economic situation as a whole".
I think that the Minister ought to be prepared to say that the fine words that we have heard about the level of pensions being tied to the level of earnings is subject to that qualification.
Experience has shown that under a Labour Government economic situations are liable to get out of hand. [HON. MEMBERS: "Oh!"] We all recall what happened in the past to the notion of a free health service. Prescription charges had to be brought in. The Labour Party cannot claim that its record in these matters inspires confidence.
I should like the Minister to explain to the House whether
the national economic situation as a whole
still applies and whether it is there to qualify the proud commitment to keeping pensions in line with earnings about which both he and the Secretary of State have boasted. It must apply.
My intention is to probe two important points: first, how earnings are to be defined, and, secondly, the validity and meaning of Section 39(3)(b) of the 1973 Act.

Mr. O'Malley: I am grateful to the hon. Member for Aylesbury (Mr. Raison) for moving what he described as a probing amendment and also for making a speech from which I learned something. His speech was fuller than my brief and I appreciate the work he has put into it. If the amendment would bring about an additional guarantee or improvement for retirement pensioners and other beneficiaries through a tightening of the definition—for example, through removing the word "earnings" and replacing it by "adult male industrial earnings"—we should be glad to accept it. But that is not the case.
The phrase "adult male industrial earnings" refers to the index which is


generally used and means the average gross earnings of full-time male manual wage earners in manufacturing and some of the principal non-manufacturing industries. Those average earnings, with some of the corresponding figures for women, are taken from the inquiry conducted by the Department of Employment every October. The industries covered include nearly 10 million employees, but the principal industries not covered are agriculture, coal mining, nationalised and port transport, shipping, distribution, catering, commerce, banking and domestic services.
If this index is to be used as a basis for assessing pensions, there are obvious defects. If it is written into the Bill the Department of Employment will be restricted if in the future it proposes to improve, make more sophisticated or further develop the provision or bring in additional groups. The hon. Member for Aylesbury raised a valid point. As he said, it is an October index but the uprating next year, for example, will be in July. Presumably the October index should be used. The Department is considering precisely this matter. The October index is not the only one, and no one is saying that it is ideal for the purposes of the estimates. There are also the monthly index and the new earnings survey which are carried out each April. These could prove to be more favourable yardsticks.

Mr. A. P. Costain: Is overtime taken into account in calculating the index? Is it based upon a standard hour which takes account of overtime?

Mr. O'Malley: It takes account of that factor. Nevertheless, as with all the indices in this sector, we do not suggest that it is the most satisfactory and sophisticated for the purposes of our calculations.
In moving the amendment the hon. Gentleman has spotlighted a problem which the Department has regarding the July uprating in 1975. However, I recommend that we should not write in the words "adult male industrial" in addition to simply "earnings". To do so could fossilise that particular index as it stands at present. It could exclude the use of other indices which may be

more favourable or more suitable in future. It is likely that women's earnings, for example, will move faster than men's at a time when as a nation we are moving towards the concept of equal pay, although I suspect that that may be a somewhat lengthy process.
We should leave the word "earnings" in a general form in this legislation as it has been in other legislation when there has been need to refer to an earnings index of some kind. To do this does not preclude the use of the index mentioned; nor does it exclude in future the use of more sophisticated indices or other indices which could be more favourable to retirement pensioners and other long-term beneficiaries.

Mrs. Kellett-Bowman: I hope that the Secretary of State does not subscribe to the hon. Gentleman's comments about equal pay for women.

Mr. O'Malley: I would always be most aware not only of my right hon. Friend the Secretary of State but also of the hon. Lady in that matter. I made an assessment of what may turn out to be the situation. I hope that as a result of legislation and long-term trade union pressures there will be a much speedier movement than at present towards equality of income and opportunities for women.

Mr. Charles Loughlin: I am grateful for what my hon. Friend has said about the amendment, but I remain a little disturbed. Perhaps he will forgive me if in my ignorance I probe the matter a little. I have always argued that pensions should be linked to earnings and I have assumed, rightly or wrongly, that this would enhance pensions. What disturbs me are the figures used by the hon. Member for Aylesbury (Mr. Raison), which were not challenged. He said that pensions were better related to prices during the office of the Conservative Government and that if this had not been done—

Mr. Raison: That was not what I said. My point was that during the period of the last Conservative Government pensions were raised more than prices and more than earnings. Whichever yardstick one chooses to use, we did better.

Mr. Loughlin: Surely the basis of the hon. Gentleman's case was an argument as to whether pensions should be related to prices. HANSARD will prove this tomorrow morning.
9.0 p.m.
The hon. Gentleman argued also that pensions rose higher than wages—[Interruption.] Let me get this clear. There is no reason why I should not be able to ask my hon. Friend in all innocence whether earnings include premium time payments but exclude days lost through industrial disputes. If that is so, there is no earthly reason why the pensions, as a percentage of earnings, should not have risen faster than earnings themselves under the Tory Government, because their three years in office saw the biggest explosion of loss of earnings that we have had since 1926.
When Tory Members make these comparisons they should tell the whole story. The truth is not that they did well for the pensioners but that they pursued a confrontation policy in industry which made the earnings figure much lower than it should have been. In 1972 we lost more working days and, therefore, more earnings than in any year since 1926. In 1971 and 1973 also, astronomical numbers of days were lost and, therefore, earnings were lost.
Tory Members fake every possible figure they use. They can laugh—

Mr. Patrick Cormack: It is funny.

Mr. Loughlin: They fake every figure they use. If we relate pensions to earnings, whether male industrial earnings or overall earnings, those earnings would have been substantially reduced because of the loss of man hours through their industrial policy. Hon. Members opposite are tricksters of the worst kind.

Mr. Raison: I will not be drawn by the hon. Member for Gloucestershire, West (Mr. Loughlin), who did not understand what I was saying. He has not understood what this little debate has been about. If he wants the facts, he was quite wrong. According to the October earnings inquiry, the index of male industrial earnings rose between 1971 and 1972 from 110 to 127 compared with 1970. That undermines what he said.
The Minister started encouragingly by saying that my research had been greater than his brief or his research, but I am not sure what I was meant to deduce from that. He totally failed to answer my second point. He produced an acceptable answer, although an uninspiring one, to the question of what earnings index should be used. I appreciate the difficulties which he has put forward. We do not believe that the yardstick that is included in our amendment is necessarily the right one, so we will not press him on that.
But at least the Minister owes the Committee some comment on my point about Section 39()(b) of the Social Security Act 1973. I should be grateful if he would at least acknowledge that that provision gives the power to override the link between earnings and pensions of which he and his right hon. Friend have made so much. Would he at least acknowledge that the national economic situation can be used as a reason for not granting a pensions increase based on earnings?

Mr. O'Malley: This situation existed before Section 39 of the 1973 Act which deals with the annual review of benefits, and talks about November and the end of November rather than October. However much the hon. Gentleman wriggles, this is the first time in legislation that there has been a commitment that pensions should rise and move with national average earnings.

Mr. Raison: What I am putting to the hon. Gentleman is that the very next subsection in the 1973 Act produces a clear qualification that whether any of the rates ought to be increased should have regard to
the national economic situation as a whole
If the national economic situation as a whole is very grave, as I believe it may well be under a Labour Government, can that be used as a reason for the Government not increasing pensions in line with earnings?

Mr. O'Malley: From behind the hon. Gentleman's elegant language, I now understand what he is asking. He is asking whether we shall rat on our commitment. A previous Secretary of State of a Conservative Government gave him-


self the opportunity to do so and presumably deliberately put this kind of commitment into the 1973 Act. We shall not do that.

Mr. Raison: But the fact remains that the Government have not removed this provision. The Government are proposing to amend the rest of Section 39 and to make changes there. They could perfectly well have changed this subsection if they so desired. There is no reason why they could not do so. The Minister has said that he will not rat and that this is a firm commitment. If that is so, why did he not strike out this commitment in subsection (3)(b)?

Mr. O'Malley: The hon. Gentleman is asking why one specific section of the Social Security Act 1973 was not changed. What we have done in the Bill is to make the minimum changes necessary in legislation to achieve our own objective. As the hon. Gentleman is pressing for changes in the 1973 legislation, may I say that I think that he will get changes?

Mr. Raison: The Minister cannot get away with this. Clause 5 is specifically designed to amend Section 39 of the 1973 Act. There would have been no difficulty in adding another small amendment to get rid of that section if the Government so desired. I am not saying that the Government should have done it. I am saying that the Government are showing signs of hypocrisy in stating categorically that they will tie pensions increases to earnings when they are quite deliberately retaining this get-out clause.
The Minister's arguments do him no credit. It would have been very much better if he had done his homework on this matter. I see that he is about to receive a note. Perhaps something has arrived from Job to help him out. Secondly, it would have been better if the hon. Gentleman had come clean. As I have said, while we do not believe that our amendment is appropriate, the Minister's answers do him no credit.
I beg to ask leave to withdraw the amendment.

Hon. Members: No.

Mr. O'Malley: Hon. Members on the Opposition benches have to try to laugh

about something, for in their present position they can find little to laugh about. What I find fascinating is that the hon. Gentleman—

Mr. Raison: On a point of order, Mr. Murton. I have begged to ask leave to withdraw the amendment. Is it proper for the debate to continue?

The Deputy Chairman: I think that I should explain to the Committee as a whole that if after an hon. Member has asked leave to withdraw his amendment another hon. Member rises and speaks, the only way of dealing with that matter ultimately is by putting the Question, when possible it could be negatived.

Mr. Loughlin: Further to that point of order, Mr. Murton. When the hon. Gentleman begged leave to withdraw the amendment, I objected. Therefore, he cannot withdraw his amendment.

The Deputy Chairman: The hon. Gentleman's objection was sustained.

Mr. O'Malley: It ill becomes the hon. Member for Aylesbury (Mr. Raison) to start criticising this Government about legislation which was introduced by the previous Conservative Secretary of State. The criticisms, which I do not accept, that we might intend to rat on our earnings dynamism because of that provision of the Act, can come only from a guilty conscience felt by Conservative Members who know that when the previous Government were making their famous pledges about price protection they were reserving to themselves, tucked away in a principal piece of legislation, the right to say "We shall promise the electorate price protection, but if we want to get out of that promise we shall do so, because this subsection in the Act gives us an escape route."
We shall not use that escape route. When the Act is revised, as it will be, along with the whole of the social security structure, the hon. Gentleman can apologise to the Labour Government for the unjustified remarks he has made tonight. The fact that his Government would act in that way is no reason to suggest that we shall.

Sir Geoffrey Howe: That is not the point. The point is one of some gravity and responsibility, to which I should like


the Minister to address himself. The Secretary of State said on 15th March:
We shall also ensure … that pensions thereafter are increased annually in proportion to increases in average national earnings."—[OFFICIAL REPORT, 15th March 1974; Vol. 870, c. 524–525.]
In his reply so far, the Minister is plainly conceding that the continued existence in Section 39(3) of the 1973 Act of paragraph (b)(ii), providing that the Secretary of State shall have regard to
the national economic situation as a whole",
entitles the Secretary of State as a matter of law not to fulfil the pledge which the right hon. Lady gives to ensure that link.
It may well be wise for any Government to retain that obligation to look at the national economic situation. It may well be particularly wise for the present Government to do so, in the light of their failure to keep pensions ahead of prices when they were last in office.
I should like the Minister to concede that that provision continues to exist as a qualification of the right hon. Lady's pledge, that it exists although the Long Title of the Bill gives power to amend Section 39, and that it would be the simplest matter in the world to include a repeal of that subsection.

Mrs. Castle: As the right hon. and learned Gentleman has called my words into dispute, I should like to answer that point.
I do not for a moment concede that the paragraph lends itself to the interpretation the right hon. and learned Gentleman has put upon it. If, however, the pledge given by the Conservatives that they would ensure that pensions were reviewed annually in line with prices was one that they made under Section 39, that had as much validity as, and no more than, my pledge to substitute the word "earnings" for "prices" in the subsection.
Therefore, I think that it is pretty despicable of the right hon. and learned Government, who should know better and who has forensic authority at stake, to turn this kind of legal innuendo into a political attack. It is unworthy of him.
When the right hon. and learned Gentleman asks me why we do not seek the oportunity to amend a Conservative Secretary of State's wording, what the Opposition are implying, which I am not, is

that that wording gave their Secretary of State an escape route from his electoral commitments. I do not, and never have, put that interpretation upon it. But it in no way alters the validity of our pledge in relation to the pledge given by the right hon. Member for Leeds, North-East (Sir K. Joseph).
9.15 p.m.
All that we are doing is to amend Section 39(3) of the 1973 Act, which says that
In the course of a review of social security benefits under this section the Secretary of State shall consider—"—
this is the vital part, and the right hon. and learned Gentleman knows it perfectly well—
(a) the extent to which current rates appear to him to have retained their value in relation to the general level of prices…
We propose to amend
retained their value in relation to the general level of prices
to read:
retained their value in relation to the general level of earnings".
That is the statutory distinction that we are making. If the right hon. and learned Gentleman now tries to suggest that subsection (b) has a different authority—

Mrs. Kellett-Bowman: rose—

Mrs. Castle: No, I shall not give way. The hon. Lady will only further darken counsel. I repeat that paragraph (b), with which the right hon. and learned Gentleman is now trying to make such play, is of a different level of authority. Whatever interpretation he tries to put on subsection (3)(b), he is retrospectively blackening the name of his right hon. Friend the Member for Leeds, North-East. His right hon. Friend put in an escape clause. Thus the right hon. and learned Gentleman's allegation has no validity. I find it highly amusing that Opposition right hon. and hon. Members now say "If you want to keep your election pledge, you should take out this naughty escape route from our clause that we put in. You should give the country firmer guarantees on earnings than we did on prices." That is an absolute piece of political irrelevancy which is designed to cast unwarranted doubt on our pledge, which has all the strength which the pledge of our predecessors did not possess.

Sir G. Howe: The right hon Lady is obviously rattled, but the point that I make—

Mrs. Castle: —not rattled—angry and contemptuous.

Sir G. Howe: Perhaps the right hon. Lady will cool it for a moment. She referred to the opening words of subsection (3) and said that the words "shall consider" apply with equal force to the matters set out in paragraph (b). We are anxious that the Government should retain the qualification in paragraph (b) to their pledge, if qualification it be. We have not yet been told whether it is a qualification.

Mr. O'Malley: It is the right hon. and learned Gentleman's Act.

Sir G. Howe: The Committee is now debating a Bill that makes provision for amending Section 39 of the 1973 Act. We ask the Minister—so far he has failed to answer—whether the reference to the national economic situation qualifies the pledge which was given by the right hon. Lady. The country wants to know the answer, because between June 1970 and the beginning of this year, under the Conservative Government, pensions rose faster than prices and faster than average earnings. The previous Labour Government made their initial increase, which took effect in March 1965, and thereafter, until June 1970, the single pension rose by 25 per cent. compared with a greater rise in prices of more than 27 per cent. and a 44 per cent. rise in average earnings. It is because of the lamentable failure of the previous Labour Government to keep pensions rising in line with earnings and prices that we want to know whether the Government accept that the paragraph in any way goes behind the pledge which the right hon. Lady has given.

Mrs. Castle: Having listened to the right hon. and so-called learned Gentle-man—[HON. MEMBERS: "Oh."]—I am not surprised that this country was plunged into such disaster following the Industrial Relations Bill which he piloted through the House.

Mrs. Kellett-Bowman: Answer the question.

Mrs. Castle: I will. I repeat what I said earlier, and I am glad that I am a better legal expert than the right hon. and learned Gentleman. If only he had read the whole of Section 39 and in particular subsection (4), he would have found that that subsection makes it clear that subsection (3)(a) predominates and that the provisions of subsection (b) are at the discretion of the Secretary of State. [Interruption.] The illiteracy of the hon. Member for Lancaster (Mrs. Kellett-Bowman) is painful to watch.
What subsection (4) says is that
If on his review the Secretary of State concludes that current rates have not retained their value as mentioned in subsection (3)(a) above, he shall prepare and lay before each House of Parliament …"—
That is where the instruction lies. It is further to subsection (3) of Section 39 that the Secretary of State is bound to consider the extent to which current rates appear to have retained their value in relation to prices. That is the key point. We are bound, and intend to be bound, to place upon ourselves a statutory obligation which we cannot evade and which we have no desire to evade.

Mr. Raison: If the question which I put fairly and calmly to the Minister earlier had been properly answered, it would have saved a great deal of heat and a certain amount of ill temper on the part of the Secretary of State. The Minister completely ignored my question. I do not think that it is very much to the credit of the Government. On an important matter like this they should have done their homework rather than wait for succour from the Official Box at the last moment.

Mr. O'Malley: What is perfectly clear is that the hon. Gentleman and the right hon. and learned Gentleman—who presided over the Industrial Relations Act—are continuing the campaign of filth and smear which we have had from the Conservative Party during the election campaign. It is precisely that kind of technique which they are using on this occasion, attempting to cast doubts on the good faith of the Government's intention to move pensions in future with the movement in national average earnings. We promised to do that and that we shall do.

Amendment negatived.

Sir Geoffrey Howe: I beg to move Amendment No. 7, in page 5, line 4, at end insert:
'(3) In subsection (3)(b) of the said section 39, after sub-paragraph (i) there shall be inserted the following sub-paragraph—
(ia) the relationship between the rates of social security benefits and the impact on benefits of income tax and the pattern of allowances for tax purposes under the Finance Acts,'
I hope that we may proceed to debate this important amendment with a little more tranquillity from the Government Front Bench than we have just experienced. This is a proposal to insert a new sub-paragraph in Section 39(3)(b) of the Social Security Act 1973. The amendment does not achieve all that we would wish. It does not go as far as we would like. Its intention is to discover the Government's position in relation to possible progress towards a tax-credit scheme or something of that kind.
It was not possible for us to draft an amendment that was in order within the terms of the Bill and which would have required the Government to lay before the House their proposals for the implementation of a tax-credit scheme. I hope that this amendment will provide the opportunity for a short debate on the Government's intentions. The amendment requires the Government to have regard to the relationship between the rates of benefit and the impact on benefits of income tax and tax allowances.
I know that the right hon. Lady, as a member of the Select Committee, has given a great deal of thought to this subject. We were concerned by the absence from the Queen's Speech of any reference to the preparation or implementation of a tax credit scheme. We have remained concerned by the notable lack of enthusiasm and silence on the part of the Government about any such scheme since they came into office. We want to press further to discover their intentions about this and go as far as we can to make them accept some obligations in relation to it.
As the right hon. Lady said on Second Reading, she is concerned with progress towards the elimination of poverty, notably, perhaps, the elimination of family poverty. That is why we,

and others outside the House of Commons, have been concerned, at the absence, so far, of any provisions in relation to family allowances.
We welcome the continuance of the family income supplement scheme as the interim scheme it was inevitably originally designed to be. It is possible to do much more with the £500 million, for example, which is to be spent on indiscriminate food subsidies, by the introduction of something like a tax credit scheme. Surely by now it is universally acknowledged that something more is necessary than the continuation, either of the present network of means-tested benefits or progress simply by an extension of general benefits by categories rather than by reference to families.
It is now generally recognised that there is a good case for integrating the tax system and the benefit system. It is generally recognised that only in this way shall we respond to the universally accepted need to roll back the carpet of means tests of which the right hon. Lady spoke.
The truth is that the tax system and the benefit system are inextricably interwoven. The amendment enjoins the Government to recognise that specifically; and we hope that they will do so by indicating their willingness to make progress by something like a tax credit scheme. The arguments in favour of this kind of approach have been voiced in the House of Commons by spokesmen on both sides under successive Governments for 10 or 15 years. I recollect reading speeches by the former Member for Kettering, Mr. Gilbert Mitchison, who was at one time the Labour Party spokesman on these matters. He was arguing in favour of an approach of this kind in the days when "receive as you need" was the jargon description of a scheme of that sort. Then he was followed by Douglas Houghton, again from the Dispatch Box, arguing for the Labour Government in favour of a minimum income guarantee which was part of the 1964 programme of the Labour Party.
Since then, the jargon has rolled on and we talk now of a negative income tax. But, whatever one calls it, we believe that there is an overwhelming case in favour of making progress with the work under-taken by the last Government towards


the introduction, in stages if necessary, of a tax credit scheme. That has the merit that it would involve great simplification of our social and taxation system. It has the merit that automatically it would bring more help to families and individuals in real need without the need for individual application and, more importantly, without the need for means testing.
The right hon. Lady, or it may have been her hon. Friend, spoke about the strategy which either side wants to adopt to get ordinary retirement pensioners off means-tested benefits. We certainly want to do that as far as it is possible. We believe that the quickest, simplest, fairest and most expeditious way of doing that is by making progress on the foundations laid by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) in his Green Paper published in October 1972, Cmnd. 5116.
9.30 p.m.
I know that the right hon. Lady adopted a different approach, but the majority of that Committee was in favour of making progress on those lines. I know that other members of the Committee now sitting on the Front Bench opposite took yet a further variation in their approach, and I think that to some extent Douglas Houghton was running a one-man approach of his own. [Interruption.] That right hon. Gentleman did yeoman service to the Labour Party as well as to the House for many years. It is odd that it should need me to pay tribute to that.
I do not see myself how, fast enough and effectively enough, we are going to make the kind of progress that we all want towards the elimination of most means-tested benefits, towards the purposive and effective relief and conquest of poverty as far as it can possibly be done, without individual application, unless something in the nature of a tax credit scheme is proceeded with and brought forward by the Government.
It is because we want to place an obligation upon the Government to do that and to explain their attitude towards it now I have moved the amendment.

Mrs. Castle: As the right hon. and learned Gentleman has admitted, this is what I think is called a technically defec-

tive amendment in the sense that, in the first place, its meaning is far from clear. Secondly, if the amendment were accepted by the Committee and included in the Bill it would merely be another of those considerations which the Secretary of State at his discretion had to take into account in making the annual review under Section 39 of the 1973 Act. In view of our last fracas it is pertinent to point out that this would come within the discretionary subsection 3(b), and therefore it would merely become one of those considerations that the Secretary of State should, without commitment, have in mind.
On the sheer merits of the content of the amendment I do not think that the right hon. and learned Gentleman would press it very hard. I realise his difficulty in keeping within the terms of the Bill, and I am not trying to make any point out of that. The right hon. and learned Gentleman was frank with the Committee and said that he merely wanted to use the amendment as something on which to hang what he hoped would be a short discussion on the tax-credit scheme in order to get our views on it.
Both my right hon. Friend the Chancellor of the Exchequer and myself in previous debates have made clear the Government's attitude to the tax-credit scheme which I had the pleasure of studying in the Select Committee under the chairmanship of the hon. Member for Croydon, South (Mr. Clark). As the Chancellor said during the Budget debate, we do not have any objection in principle to a negative income tax. Indeed, as has been said, the Labour Government initially started the exploration of it.
As the right hon. and learned Gentleman looks a little puzzled, perhaps for his benefit I should read what the Chancellor said in his Budget speech:
We believed, as we explained at length in opposition, that there are serious drawbacks to the tax credit scheme proposed by the previous administration. They were fully described in the Minority Reports of the Select Committee. We have not taken any decision against the principle of a negative income tax, which was the subject of considerable study under the previous Labour Government, but our immediate priority has been to carry out the major increase in national insurance benefits".—[OFFICIAL REPORT, 26th March 1974; Vol 871, c. 312.]
I remind the Committee of that point.
We have serious criticims of the tax credit scheme that was examined by the Select Committee, and perhaps I may state briefly two of our objections. The right hon. and learned Member for Surrey, East (Sir G. Howe) said that was to be a way of reaching an objective that we all share—that of rolling back means testing—but the trouble with the tax credit scheme is that it did not begin to tackle the problem of means testing. As the Green Paper which the previous Government produced pointed out, if the scheme had been introduced in October 1972 about 1 million national insurance beneficiaries would have had their incomes raised above the supplementary benefit level. That would have been 1 million out of 2¾ million people, and that would not even be half way towards getting rid of supplementary benefits. Indeed, apart from taking 800,000 pensioners above the supplementary benefit level, it would get rid of only one means test, the family income supplement. And whether it would achieve even that would depend on the way it was financed.
Another of our objections was that the previous Government never at any time gave any indication of how they proposed to raise the illustrative figure of £1,300 million. Unless one knows how it is to be raised, one does not know the value of the so-called increase in benefits. Indeed if the Government, sticking by the argument that they made in the Select Committee and the House, were to contemplate financing this out of growth—that is fiscal drag—without any increase in tax rates, as the calculations of experts to the Committee made clear, people could be worse off.
The one point on which there was unanimity among the members of the Select Committee, and I think that there is unanimity in the House, was in respect of the child credit. As a result of strong representations, the proposals for the child credit were, on the recommendation of the Select Committee, to be altered in such a way that they hardly became part of the tax credit scheme at all. We unanimously agreed that one could strike a blow against family poverty by sufficiently adequate cash allowances for all children, including the first, allowances which all agreed must be payable to the mother. In this way the allowance would not come as a credit to offset the tax through the father's wage packet.
It is possible to detach such an idea from the complex context of the tax credit scheme outlined by the Government. That is what we would propose to do, and that is what is meant by our child endowment scheme. On those lines, therefore, we should presumably be marching in harmony.
We believe that more generous longterm pension proposals of the kind that we are now working out will be far more effective in taking pensioners off supplementally benefit than, on the previous Governments' own admission, the tax credit scheme would have been. This is an extremely complicated and fascinating matter. I hope that we shall have opportunity to discuss it in detail in the House. It is important and I believe that we should probe it. We should certainly be willing to examine whether it is possible to find some alternative form of tax credit system without the disadvantages we foresaw in the system proposed in the Green Paper, the defects of which my hon Friends and I have outlined in our minority report.
It is, therefore, in my opinion a subject which we should continue to discuss and to probe. It is extremely complex. With all respect to the Committee I suggest that it does not arise on this uprating Bill. It is part of the long-term policy that we shall be discussing in all its facets in the months to come. Certainly if the amendment were to be adopted today it would add nothing to the substance of the considerations that the Secretary of State would have to have in mind during an uprating.

Mr. William Clark: In moving this amendment my right hon. and learned Friend said that he accepted its technicalities and deficiencies. However, there is no question but that the idea behind the amendment is to get the tax credit system started. The right hon. Lady says that in their minority report the Government Members rejected the scheme. I remind her that they put in two minority reports, one by the right hon. Lady and one by the hon. Gentleman who is now the Chief Secretary. I am not trying to create party rancour, but it is fair to say that even in a Select Committee the Socialist Party would split three ways, for the right hon. Member for Sowerby, as he then was,


Mr. Houghton. voted for the majority report.
The right hon. Lady has got the wrong angle on this subject. We are arguing in this context that if we take our tax system as it is and one takes any Chancellor from any party and he increases tax allowances, that is splendid only if one has sufficient income to absorb any increase in personal allowances. A tax credit system, however, would mean that such an increase was a positive benefit to the person entitled to it.
The right hon. Lady is less than fair when she says that there are better methods, that abolishing family allowances and introducing a child credit is a good idea. That is only half of the story. If we are to have a child credit, it means that the child allowance, as we now know it, disappears out of the window, for one cannot have both.
All the Chief Secretary was arguing in his minority report was lack of flexibility. But now he is in the Treasury he probably realises a little more clearly that there is as much flexibility in the tax credit system as per the majority report as there is in our present tax system.
Another respect in which the right hon. Lady is less than fair is that she glibly says that if we are endeavouring to get rid of as much poverty as possible by the tax credit system, if the marriage allowance or the single allowance is increased, one can float off more and more people from supplementary benefit. The tax credit system would abolish FIS; it would increase the pension for the retired; and it would help the single-parent family.
It would also help a person trying to buy his own house, for under the tax credit system he would get what is known as a tax credit mortgage and instead of paying 11 per cent., he would get 33 per cent. automatically knocked off. I make that about 7½ per cent. So here, at a stroke, we could help the owner-occupier. But I am sure that you would not want me, Mr. Thomas, in the context of a National Insurance Bill, to talk about house ownership, important though it may be.
I think that the right hon. Lady should think about this again. I hope my right hon. and learned Friend will press the amendment, because the Conservative

Party has gone on record as producing a report, albeit there were two minority reports. The Liberals voted with us, and I am sorry that they are not here to enjoy this debate, because they always profess so much concern for those in poverty and a desire to help all people. I regret that they are not here, but no doubt they are carrying on their community politics somewhere else.
The tax credit system should not be put off, and I hope that my right hon. and learned Friend will press this to a vote. As I have said, the Conservative Party accepted the majority report. My right hon. Friend the then Chancellor of the Exchequer accepted our report in toto. We put it in our manifesto, and I think we ought to show at every opportunity that we intend, when next we get into office, to introduce a system which will automatically take many thousands of people out of poverty and away from means-tested benefits. In time we will make the system more sophisticated and get more means-tested benefits brought into the tax credits system.
For those reasons, I hope that my right hon. Friend will press this amendment and I regret that the right hon. Lady has not seen fit to accept it.

9.45 p.m.

Sir Geoffrey Howe: I am grateful to have had the opportunity of listening to the authoritative comments of my hon. Friend the Member for Croydon, South (Mr. Clark) about the arguments that we have advanced during this short debate. They are forceful arguments and strongly favour continued progress towards a tax credit scheme.
Of course, I listened with interest to what the right hon. Lady said. Manifestly, as was implicit in what my hon. Friend said, there may be scope for changes in one direction or another in the pattern, shape and financing of the tax credit scheme as it emerged from the last Select Committee analysis.
To some extent the child credit part of such a scheme can be regarded as a first step. The fact that by no means all, indeed only a minority, of retirement pensioners would take a means test on that analysis indicates why it deserves further examination. I do not believe that if Beveridge's original conception of means-tested assistance as a safety-net


for the tiny minority is to be fulfilled we should ever get close enough to that without a redesigned tax credit system. That is the underlying argument, and it is for that reason that we attach high importance to this scheme and intend to press it for so long as this Parliament may last and thereafter in our own policies.
We are grateful for the willingness of the right hon. Lady to examine possible alternative approaches. I am grateful that this is a measure on which, to some extent, the historically bipartisan approach to the problem in the House of Commons appears to be surviving. I do not think that the Conservative Party in opposition can regard the statement by the right hon. Lady as sufficiently acknowledging the importance we attach to this. My hon. Friend urged me to press this to a Division. I recognise that those who study the reports in the OFFICIAL REPORT hereafter may have some difficulty in seeing how far the amendment takes us towards the objective. In this case people are entitled to

see why we have moved the amendment, why we speak in support of it.

I am delighted to welcome the hon. Member for Hazel Grove (Dr. Winstanley) on his brief visitation. We have been commenting in his absence on the absence of representatives of his party.

Dr. Michael Winstanley: We are not often absent from the Lobby and we are not always accompanied by hon. Members on this side.

Sir G. Howe: It is nevertheless significant that on this important matter, which goes to the heart of the pattern of social provision, the Liberal Party has been unrepresented by voice. We are glad that the Liberal Party is now represented in this form.
For the reasons I have stated, I invite my hon. Friends to support me in the Lobby.

Question put, That the amendment be made:—

The Committee divided: Ayes, 253, Noes 282.

Division No.12.]
AYES
[9.49 p.m.


Adley, Robert
Clarke, Kenneth (Rushcliffe)
Gorst, John


Aitken, Jonathan
Clegg, Walter
Gow, Ian (Eastbourne)


Alison, Michael (Barkston Ash)
Cockcroft, John
Gower, Sir Raymond (Barry)


Allason, James (Hemel Hempstead)
Cooke, Robert (Bristol, W.)
Grant, Anthony (Harrow, C.)


Ancram, M.
Cope, John
Gray, Hamish


Archer, Jeffrey (Louth)
Cordle, John
Grieve, Percy


Atkins, Rt. Hn. Humphrey (Spelthorne)
Cormack, Patrick
Grist, Ian


Awdry, Daniel
Corrie, John
Grylls, Michael


Baker, Kenneth
Costain, A. P.
Gurden, Harold


Banks, Robert
Crouch, David
Hall, Sir John


Beith, Alan
Crowder, F. P.
Hall-Davis, A. G. F.


Bell, Ronald
Davies, Rt. Hn. John (Knutsford)
Hamilton, Michael (Salisbury)


Bennett, Sir Frederic (Torbay)
d'Avigdor-Goldsmid, Maj.-Gen. James
Hampson, Dr. Keith


Bennett, Dr. Reginald (Fareham)
Dean, Paul (Somerset, N.)
Hannam, John


Benyon, W.
Deedes, Rt. Hn. W. F.
Harrison, Col. Sir Harwood (Eye)


Berry, Hon. Anthony
Dixon, Piers
Harvie Anderson, Rt. Hon.


Biffen, John
Dodds-Parker, Sir Douglas
Havers, Sir Michael


Biggs-Davison, John
Dodsworth, Geoffrey
Hawkins, Paul


Blaker, Peter
Douglas-Home, Rt. Hn. Sir Alec
Hayhoe, Barney


Boardman, Tom (Leicester, S.)
Drayson, Burnaby
Heath, Rt. Hn. Edward


Body, Richard
du Cann, Rt. Hn. Edward
Heseltine, Michael


Boscawen, Hon. Robert
Durant, Tony
Higgins, Terence


Bowden, Andrew (Brighton, Kemptown)
Eden, Rt. Hn. Sir John
Holland, Philip


Boyson, Dr. Rhodes (Brent, N.)
Edwards, Nicholas (Pembroke)
Hooson, Emlyn


Braine, Sir Bernard
Elliott, Sir Robert
Hordern, Peter


Bray, Ronald
Fairgrieve, Russell
Howe, Rt. Hn. Sir Geoffrey (Surrey,E.)


Brewis, John
Fenner, Mrs. Peggy
Howell, David (Guildford)


Brittan, Leon
Fidler Michael
Howell, Ralph (Norfolk, North)


Brown, Sir Edward (Bath)
Finsberg, Geoffrey
Howells, Geraint (Cardigan)


Bruce-Gardyne, J.
Fletcher, Alexander (Edinburgh, N.)
Hunt, John


Buchanan-Smith, Alick
Fletcher-Cooke, Charles
Hurd, Douglas


Buck, Antony
Fookes, Miss Janet
Hutchison, Michael Clark


Budgen, Nick
Fowler, Norman (Sutton Coldfield)
Iremonger, T. L.


Bulmer, Esmond
Fox, Marcus
Irvine, Bryant Godmen (Rye)


Burden, F. A.
Fraser, Rt. Hn. Hugh (St'fford&amp;Stone)
James, David


Butler, Adam (Bosworth)
Gardiner, George (Reigate&amp;Banstead)
Jenkin, Rt. Hn. P. (R'dgeW'std&amp;W'fd)


Carr, Rt. Hn. Robert
Gilmour, Sir John (Fife, E.)
Jessel, Toby


Chalker, Mrs. Lynda
Glyn, Dr. Alan
Johnson Smith, G. (E. Grinstead)


Channon, Paul
Godber, Rt. Hn. Joseph
Johnston, Russell (Inverness)


Chataway, Rt. Hn. Christopher
Goodhart, Philip
Jones, Arthur (Daventry)


Churchill, W. S.
Goodhew, Victor
Jopling, Michael


Clark, A. K. M. (Plymouth, Sutton)
Goodlad, A.
Kaberry, Sir Donald


Clark, William (Croydon, S.)






Kellett-Bowman, Mrs. Elaine
Morris, Michael (Northampton, S.)
Skeet, T. H. H.


Kershaw, Anthony
Morrison, Charles (Devizes)
Smith, Dudley (W'wick&amp;L'm'ngton)


Kimball, Marcus
Morrison, Peter (City of Chester)
Spicer, Jim (Dorset, W.)


Kirk, Peter
Mudd, David
Spicer, Michael (Worcestershire, S.)


Kitson, Sir Timothy
Neave, Airey
Stanbrook, Ivor


Knight, Mrs. Jill
Neubert, Michael
Stanley, John


Knox, David
Newton, Tony (Braintree)
Steen, Anthony (L'pool, Wavertree)


Lamont, Norman
Nicholls, Sir Harmer
Stewart, Ian (Hitchin)


Lane, David
Normanton, Tom
Stodart, Rt. Hn. A. (Edinburgh, W.)


Langford-Holt, Sir John
Nott, John
Stradling Thomas, J.


Latham, Michael (Melton)
Onslow, Cranley
Tapsell, Peter


Lawrence, Ivan
Oppenheim, Mrs. Sally
Taylor, Edward M. (Glgow, C'cart)


Le Merchant, Spencer
Osborn, John
Taylor, Robert (Croydon, N.W.)


Lester, John (Beeston)
Page, Rt. Hn. Graham (Crosby)
Tebbit, Norman


Lewis, Kenneth (Rtland &amp; Stmford)
Page, John (Harrow, W.)
Temple-Morris, Peter


Lloyd, Ian (Havant &amp; Waterloo)
Parkinson, Cecil (Hertfordshire, S.)
Thatcher, Rt. Hn. Mrs. Margaret


Loveridge, John
Pattie, Geoffrey
Thomas, Rt. Hn. P. (B'net,H'dn S.)


McAdden, Sir Stephen
Percival, Ian
Townsend, C. D.


MacArthur, Ian
Pink, R. Bonner
Trotter, Neville


McCrindle, R. A.
Pym, Rt. Hn. Francis
Tugendhat, Christopher


Macfarlane, Neil
Raison, Timothy
Tyler, Paul


MacGregor, John
Rathbone, Tim
van Straubenzee, W. R.


McLaren, Martin
Redmond, Robert
Viggers, Peter


Macmillan, Rt. Hn. M. (Farnham)
Rees, Peter (Dover &amp; Deal)
Waddington, David


McNair-Wilson, Michael (Newbury)
Renton,Rt.Hn.SirDavid(H't'gd'ns're)
Wainwright, R. (Colne Valley)


McNair-Wilson, Patrick (New Forest)
Renton, R. T. (Mid-Sussex)
Wakeham, John


Marshall, Michael (Arundel)
Rhys Williams, Sir Brandon
Welder, David (Clitheroe)


Marten, Neil
Ridley, Hn. Nicholas
Walker, Rt. Hn. Peter (Worcester)


Mather, Carol
Rifkind, Malcolm
Wall, Patrick


Maude, Angus
Rippon, Rt. Hn. Geoffrey
Warren, Kenneth


Mawby, Ray
Roberts, Michael (Cardiff, N.-W.)
Weatherill, Bernard


Maxwell-Hyslop, R. J.
Roberts, Wyn (Conway)
Wells, John


MayheW, Patrick(RoyalT'bridgeWells)
Rodgers, Sir John (Sevenoaks)
Whitelaw, Rt. Hn. William


Meyer, Sir Anthony
Ross, Stephen (Isle of Wight)
Wiggin, Jerry


Miller, Hal (B'grove &amp; R'ditch)
Rossi, Hugh (Hornsey)
Winstanley, Dr. Michael


Mills, Peter
Rost, Peter (Derbyshire, S.-E.)
Winterton, Nicholas


Miscampbell, Norman
Sainsbury, Tim
Worsley, Sir Marcus


Mitchell, David (Basingstoke)
Scott-Hopkins, James
Young, Sir George (Ealing, Acton)


Moate, Roger
Shaw, Giles (Pudsey)



Money, Ernie
Shaw, Michael (Scarborough)
TELLERS FOR THE AYES:


Monro, Hector
Shelton, William (L'mb'th,Streath'm)
Dr. Gerard Vaughan and


Moore, J. E. M. (Croydon, C.)
Shersby, Michael
Mr. Richard Luce.


More, Jasper (Ludlow)
Silvester, Fred



Morgan-Giles, Rear-Adm.
Sims, Roger





NOES


Abse, Leo
Concannon, J. D.
Fitch, Alan (Wigan)


Allaun, Frank
Conlan, Bernard
Flannery, Martin


Archer, Peter (Warley, West)
Cook, Robert F. (Edinburgh, C.)
Fletcher, Raymond (Ilkeston)


Armstrong, Ernest
Cox, Thomas
Fletcher, Ted (Darlington)


Ashley, Jack
Craigen, J. M. (G'gow, Maryhill)
Foot, Rt. Hn. Michael


Ashton, Joe
Crawshaw, Richard
Ford, Ben


Atkins, Ronald (Preston, N.)
Crosland, Rt. Hn. Anthony
Forrester, John


Atkinson, Norman
Cryer, G. R.
Fowler, Gerry (The Wrekin)


Bagier, Gordon A. T.
Cunningham, G.(Islington,S&amp;F'eb'ry)
Fraser, John (Lambeth, Norwood)


Barnett, Guy (Greenwich)
Cunningham. Dr. John A. (Whiteh'v'n)
Freeson, Reginald


Barnett, Joel (Heywood &amp; Royton)
Dalyell, Tam
Galpern, Sir Myer


Bates, Alf
Davidson, Arthur
Garrett, John (Norwich, S.)


Baxter, William
Davies, Bryan (Enfield, N.)
Garrett, W. E. (Wallsend)


Benn, Rt. Hn. Anthony Wedgwood
Davies, Denzil (Llanelli)
George, Bruce


Bennett, Andrew F. (Stockport, N.)
Davies, Ifor (Gower)
Gourlay, Harry


Bidwell, Sydney
Davis, Clinton, (Hackney, C.)
Graham, Ted


Bishop, E. S.
Deakins, Eric
Grant, George (Morpeth)


Boardman, H. (Leigh)
Dean, Joseph (Leeds, W.)
Grant, John (Islington, C.)


Booth, Albert
de Freitas, Rt. Hn. Sir Geoffrey
Griffiths, Eddie (Sheffield, Brightside)


Boothroyd, Miss Betty
Delargy, Hugh
Hamilton, William (Fife, C.)


Bottomley, Rt. Hn. A[...]ur
Dell, Rt. Hn. Edmund
Hamling, William


Boyden, James (Bishop Auckland)
Doig, Peter
Hardy, Peter


Bradley, Tom
Dormand, J. D.
Harper, Joseph


Broughton, Sir Alfred
Douglas-Mann, Bruce
Harrison, Walter (Wakefield)


Brown,Bob(Newcastle upon Tyne,W.)
Duffy, A E. P.
Hart, Rt. Hn. Judith


Brown, Ronald (H'kney,S.&amp; Sh'ditch)
Dunnett, Jack
Hattersley, Roy


Buchan, Norman
Dunwoody, Mrs. Gwyneth
Hatton, Frank


Buchanan,Richard(G'gow,Springbrn)
Eadie, Alex
Healey, Rt. Hn. Denis


Callaghan, Jim (M'dd'ton &amp; Pr'wich)
Edelman, Maurice
Heffer, Eric S.


Campbell, Ian
Edge, Geoff
Henderson,Douglas (Ab'rd'nsh're,E)


Cant, R. B.
Edwards, Robert (W'hampton, S.E.)
Hooley, Frank


Carmichael, Neil
Ellis, John (Brigg &amp; Scunthorpe)
Horam, John


Carter, Ray
Ellis, Tom (Wrexham)
Howell, Denis (B'ham, Small Heath)


Carter-Jones, Lewis
English, Michael
Huckfield, Leslle


Castle, Rt. Hn. Barbara
Evans, Fred (Caerphilly)
Hughes, Rt. Hn. Cledwyn (Anglesey)


Clemitson, Ivor
Evans, Ioan (Aberdare)
Hughes, Mark (Durham)


Cocks, Michael
Evans, John (Newton)
Hughes, Robert (Aberdeen, North)


Cohen, Stanley
Ewing,H.(St'ling,F'kirk&amp;G'm'th)



Coleman, Donald
Fernyhough. Rt. Hn. E.



Colquhoun, Mrs. M. N.









Hughes, Roy (Newport)
Mayhew,Christopher(G'wh,W'wch,E)
Silkin, Rt. Hn. John (L'sham D'ford)


Hunter, Adam
Meacher, Michael
Silkin, Rt. Hn. S.C.(S'hwark, Dulwich)


Irvine, Rt. Hn. Sir A. (L'p'l,EdgeHilll)
Mellish, Rt. Hn. Robert
Silverman, Julius


Irving, Rt. Hn. Sydney (Dartford)
Mendelson, John
Skinner, Dennis


Jackson, Colin
Mikardo, Ian
Small, William


Janner, Greville
Millan, Bruce
Smith, John (Lanarkshire, N.)


Jay, Rt. Hn. Douglas
Miller, Dr. M. S. (E. Kilbride)
Snape, Peter


Jeger, Mrs. Lena
Mitchell, R. C. (S'hampton, lichen)
Spriggs, Leslie


Jenkins, Hugh (W'worth, Putney)
Molloy, William
Stallard, A. W.


Jenkins, Rt. Hn. Roy (B'ham, St'fd)
Moonman, Eric
Stewart, Donald (Western Isles)


John, Brynmor
Morris, Alfred (Wythenshawe)
Stewart, Rt. Hn. M. (H'sth,Fulh'm)


Johnson, James (K'ston uponHull, W.)
Morris, Charles R. (Openshaw)
Stoddart, David (Swindon)


Johnson, Walter (Derby, S.)
Morris, Rt. Hn. John (Aberayon)
Stonehouse, Rt. Hn. John


Jones, Arthur (Daventry)
Moyle, Roland
Stott, Roger


Jones, Barry (Flint, E.)
Mulley, Rt. Hn. Frederick
Strang, Gavin


Jones, Dan (Burnley)
Murray, Ronald King
Strauss, Rt. Hn. G. R.


Jones, Gwynoro (Carmarthen)
Nowens. Stanley (Harlow)
Summerskill, Hn. Dr. Shirley


Jones, T. Alec (Rhondda, W.)
Oakes, Gordon
Swain, Thomas


Judd, Frank
Ogden, Eric
Taverne, Dick


Kaufman, Gerald
O'Halloran, Michael
Thomas, D. E. (Merioneth)


Kelley, Richard
O'Malley, Brian
Thomas, Jeffrey (Abertillery)


Kerr, Russell
Orbach, Maurice
Thorn, Stan (Preston, S.)


Kilroy-Silk, Robert
Ovenden, John
Tierney, Sydney


Kinnock, Neil
Owen, Dr. David
Tinn, James


Lambie, David
Padley, Walter
Tomlinson, John


Lamborn, Harry
Palmer, Arthur
Torney, Tom


Lamond, James
Park, George (Coventry. N.E.)
Tuck, Raphael


Latham, Arthur(CityofW'minsterP'ton)
Parker, John (Dagenham)
Urwin, T. W.


Lawson, Goorge (Motherwell&amp;Wishaw)
Pavitt, Laurie
Varley, Rt. Hn. Eric G.


Leadbitter, Ted
Pearl, Rt. Hn. Fred
Wainwright, Edwin


Lee, John
Pendry, Tom
Walden, Brian (B'm'ham, Ladywood)


Lester, Miss Joan (Eton &amp; Slough)
Perry, Ernest G.
Walker, Harold (Doncaster)


Lever, Rt. Hn. Harold
Phipos, Dr. Colin
Walker, Terry (Kingswood)


Lewis, Arthur (Newham, N.)
Prentice, Rt. Hn. Reg
Watkins, David


Lewis, Ron (Carlisle)
Prescott, John
Watt, Hamish


Lipton, Marcus
Radice, Giles
Weitzman, David


Lomas, Kenneth
Rees, Rt. Hn. Merlyn (Leeds, S.)
Wellbeloved, James


Loughlin, Charles
Reid, George
White, James


Loyden, Eddie
Rhodes, Geoffrey
Whitehead, Phillip


Lyon, Alexander W. (York)
Richardson, Miss Jo
Whitlock, William


Mabon, Dr. J. Dickson
Roberts, Albert (Normanton)
Willey, Rt. Hn. Frederick


McCartney, Hugh
Roberts, Gwilym (Cannock)
Williams, Alan (Swansea, W.)


McElhole, Frank
Robertson, John (Paisley)
Williams, Alan Lee (Hvrng. Hchurch)


MacFarquhar, Roderick
Roderick, Caerwyn E.
Williams, Mrs. Shirley(H'tf'd&amp;St'nge)


McGuire, Michael
Rodgers, George (Chorley)
Williams, W. T. (Warrington)


Mackenzie, Gregor
Rodgers,William (Teesside,St'ckton)
Wilson, Alexander (Hamilton)


MacLennan. Robert
Rooker. J. W.
Wilson, Rt. Hn. Harold (Huyton)


McMillan, Torn (Glasgow, C.)
Rose, Paul B.
Wilson, William (Coventry, S.E.)


McNamara, J. Kevin
Ross, Rt. Hn. William (Kilmarnock)
Wise. Mrs. Audrey


Madden, M. o. F.
Rowlands, Edward
Woodall, Alec


Magee, Bryan
Sanderson, Neville
Woof, Robert


Mahon, Simon
Sedgemore, Bryan
Wrigglesworth, Ian


Mallalieu, J. P. W.
Selby, Harry
Young, David (Bolton, E.)


Marks, Kenneth
Shaw, Arnold (Redbridge, Ilford, S.)



Marquand, David
Sheldon, Robert (Ashton-under-Lyne)
TELLERS FOR THE NOES


Marshall, Dr. Edmund (Goole)
Shore, Rt. Hn. Peter(S'pney&amp;P'plar)
Mr. James Hamilton and


Mason, Rt. Hn. Roy
Short, Rt. Hn. E. (N'ctle-u-Tyne)
Mr. John Golding.

Question accordingly negatived.

It being after Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,

That the National Insurance Bill may be proceeded with at this day's Sitting, though opposed, until any hour. [Mr. Walter Harrison.]

Orders of the Day — ROYAL ASSENT

Mr. Deputy Speaker (Mr. George Thomas): I have to notify the House, in accordance with the Royal Assent Act

1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Representation of the People (No. 2) Act 1974.
2. Ayr County Council Order Confirmation Act 1974.
3. St. Andrews Links Order Confirmation Act 1974.
4. Renfrew County Council Order Confirmation Act 1974.
5. Glasgow Corporation (Miscellaneous Provisions) Order Confirmation Act 1974.
6. Glasgow Corporation (Control of Parking &amp;c.) Order Confirmation Act 1974.
7. Greenock Corporation Order Con firmation Act 1974.
8. Zetland County Council Act 1974.

Orders of the Day — NATIONAL INSURANCE BILL

Again considered in Committee.

10.3 p.m.

Sir Geoffrey Howe: I beg to move Amendment No. 8, in Clause 5, page 5, line 4, at end insert:
(2A) In subsection (3) of the said section 39, after paragraph (b) there shall be inserted the following paragraph—
(c) the rate of change in the general level of prices and earnings with a view to considering the desirability of introducing legislation requiring more frequent reviews of benefit than is provided for in this section '.
I understand that it will be for the convenience of the Committee to consider at the same time Amendment No. 9, in page 5, line 4, at end insert:
'(2B) After subsection 10 of the said section 39 there shall be inserted the following sub-section—
(10A) Following each review of social security benefits under this section, the Secretary of State shall lay before each House of Parliament a report of his conclusions on the matters which he is required to consider by subsection (3)(c) above '.
The two amendments are linked. Amendment No. 8 requires certain additional matters to be written into Section 39 of the 1973 Act. It is suggested that in the course of a review of benefits under that section the Secretary of State should consider the rate of change in the general level of prices and earnings with a view to considering the desirability of introducing legislation requiring more frequent reviews of benefits than the annual reviews provided for in that section. The linked amendment, Amendment No. 9, requires that any such review be followed by laying before the House a report of the Secretary of State's conclusions on this matter. The question is whether to impose on the Secretary of State an obligation to consider whether an annual review is enough in present circumstances. The introduction of an annual review was admittedly a great step forward. My hon. Friend the Member for Rushcliffe (Mr. Clarke) pointed this out in an earlier debate.
There has previously been an erratic pattern whereby eventually about every two years benefits have been reviewed and uprated, but this has always been a

matter of increasing concern and agitation, and so both sides welcomed the provisions of Section 39 requiring an annual review to be undertaken. That great step forward is to the credit of the previous Government.
In the present situation, in which I have already reminded the House of the anticipations of the Secretary of State for Prices and Consumer Protection about the possible movement of prices in the year ahead, the question is whether an annual review is frequent enough or good enough. While we have no quarrel with the proposed timing for the introduction of these benefit increases or with the annual review on the basis of the Bill as it stands, we are now asking why there should not be more frequent reviews.
In our election manifesto we said that we would move towards the introduction of reviews every six months. Hon. Members on bath sides must have felt increasingly attracted by this idea. I believe that the Canadian Government have recently proposed the introduction of quarterly reviews, and I understand from some of my hon. Friends that in some European countries—Belgium, I believe, is one—reviews are as frequent as monthly. This may be the kind of direction in which we should be moving, certainly if anything like the present or expected rate of inflation continues.
One of the difficulties, I know, about more frequent reviews is the administrative problem for the Department—the same problem as gives rise to the difficulty in accelerating uprating. This is an area in which we hope further progress can be made. One of the matters which was always clear to me as holding back advance on this front is the extent to which, as a nation, we have so deeply embedded in our national life a weekly rhythm of payments and incomes. This is deeply ingrained in the concept of the weekly pay packet and weekly benefit, although one can depart from that by expressing an option.
One hopes that it may be possible over the years ahead to move towards a monthly rhythm, which would certainly reduce enormously the administrative work and make this kind of uprating and a faster uprating much more possible.


But, short of that, 1 am now asking the Secretary of State to accept an obligation at the next and each successive review to consider whether more frequent reviews should not be undertaken and to report on her conclusions in the course of the report on that review. I hope that the two amendments will prove acceptable to the Government.

Mrs. Castle: It is a hallmark of the inflationary world into which we have moved that there should have been such an inflation of the pensions policy proposals of the Conservative Party in the last few years. We only recently moved to annual reviews, and under this Bill we are moving to annual reviews on the basis of earnings, not just prices. The suggestion is now made that even that is not enough.
Every Government who introduce an uprating are well aware that the erosion in the value of that pension starts from the very moment of the introduction of the uprating. We are aware of how long it will inevitably take to bring under control the runaway inflation of this country; that is why we introduced such an exceptionally large uprating. We have started with a margin over inflation and inflationary prospects that has not, I think, been embodied in any previous uprating.
Let me give an illustration. The October 1973 uprating of the last Government represented, at the time it was announced, a 14·9 per cent. increase in long-term benefits over the figure of October 1972. But by the time it came into operation that 14·9 per cent. increase was worth only 3·5 per cent. in real terms. In this uprating the increase is 29 per cent. after only 10 months. Even at the worst estimate of the possible rate of inflation this year, by the time this up-rating is introduced in July it will still represent an increase of 15 per cent.—more than three times the value in real terms of the last Conservative uprating. Therefore, the Committee will realise that we have tried to give an uprating that will insulate pensioners to a greater extent than heretofore against the price rises that lie ahead. Of course, that is coupled with the Government's other policies for holding down price increases which are of particular interest to pensioners.
The right hon. and learned Member for Surrey, East (Sir Geoffrey Howe) likes to sneer about what he calls our indiscriminate expenditure on food subsidies. But it is not indiscriminate in a situation like this to say that we shall bring down the price of milk and peg the price of bread. I should have thought that that was a very discriminatory way of operating on the expenditure of the very hard hit group which we are trying most to help. It comes a little odd from the mouth of the right hon. and learned Gentleman to talk about indiscriminate subsidies when his Government left us with the job of reducing some of the massive subsidies that they had been running up in, for example, the electricity industry. Then, when we do reduce those indiscriminate subsidies, the Opposition will complain that we have put up prices. It is a question of heads they hope they win and tails they hope we lose. But it will not prove as simple as that.

Sir B. Rhys Williams: Would it not be more discriminating to use the money to increase family allowances?

Mrs. Castle: It would not discriminate in favour of pensioners. I was talking about pensioners and how we were trying to keep down the costs of their budgets. Clearly, bread and milk figure very largely in those budgets. I have explained how we shall insulate pensioners against rent and rate increases by seeing that the pension increases do not affect rent or rate rebates and allowances. We have gone carefully down the list, to heating allowances and so on. So we have tried to create in this comprehensive uprating a greater protection for pensioners against price increases than existed hitherto.
10.15 p.m.
I owe it to the Committee to point out that the right hon. and learned Member for Surrey, East has hinted at the administrative implications. But it is not only a question whether more frequent upratings would put a strain upon my staff. I say quite categorically that more frequent upratings would make unavoidable a substantial increase in the staff of my Department. They would not be possible or tolerable on any other basis. This is one of the considerations which any Secretary of State operating


under this amendment would have to bear in mind. What anyone who calls for more frequent upratings is asking for is an increase in the staff of my Department of about 2,500 or 3,000, or even more. I hope that once again we shall be spared the hypocrisy of the Conservative Party saying, on the one hand, that they want more frequent upratings but, on the other hand, then saying "Look at the wicked Labour Government. They have increased the number of their civil servants by these fantastic figures."

Mr. McCrindle: To help the Committee to evaluate this situation, may I refer the right hon. Lady to what she said a few moments ago? It is stated that the increase that she proposes is 29 per cent., and that at worst, on introduction, that would be worth 15 per cent. Bearing in mind the reference of her right hon. Friend the Secretary of State for Prices and Consumer Protection to the possibility that inflation in the forthcoming year would go forward at up to 18 per cent., at what period during the 12 months following July does the right hon. Lady feel that the value of the pension that she is introducing would begin to evaporate?

Mrs. Castle: I am taking into account the estimate of the possible increase in prices, the worst possible estimate, for the period up to July. That is included in my calculations and is part of the price movements in the coming year which, by these various devices, the Government are seeking to curb.
I should like to to return to the point about the number of staff. It has been one of the more unpleasant features of Conservative policy and propaganda always to attack the "inflated bureaucracy" created by a Labour Government. The right hon. and learned Gentleman is asking me to inflate the bureaucracy. I am not one of those who oppose increasing the number of civil servants when it is essential to do so to give a better service to the people. But can we please now realise that we must make a choice, that either we want to give a better service or we want to bring down the number of civil servants? We cannot do both. I hope that we shall have the honesty to admit that.
I am asked in the amendment to have as one of the discretionary considerations
 the desirability of introducing legislation requiring more frequent reviews of benefit ".
Of course, any Government in the situation which the world is in of inflationary pressures would be compelled to have under consideration the extent to which even the most careful planning of uprating to forestall price increases could be undermined. If that happened, any Government and any House of Commons would have to consider it. Therefore, I am willing to accept the amendment, because it is a consideration that I should, of course, have to have in mind anyway.
I repeat that we have given ourselves a margin that I hope will hold in real terms, but in accepting the amendment I accept that in the present fluid and difficult economic situation any Government would have to have that sort of consideration in mind.
I am therefore happy to accept the amendment.

Mr. Gwilym Roberts: The arguments in the Committee are becoming more absurd as the evening goes on. We had a complex discussion on indices to start with, where the difference might be only that between 112 and 113, and we were talking about a matter of some lop in £10. Now the right hon. and learned Member for Surrey, East (Sir G. Howe) talks about moving towards monthly reviews. When we talk like that, we are thinking of something like Latin American inflation.
Clearly, the amount of leeway in the figures is already adequate. Even the proposal in the Conservative manifesto of a six-monthly review as a standard procedure was, I feel, only a gimmick, and it is appearing in the debate again as a gimmick.
Rather than add to the administrative costs by having over-frequent reviews, a more subtle approach might be to rely on methods of economic forecasting, anticipating what the index will be, instead of adding to the burdens of my right hon. Friend's Department in the way suggested.

Mr. Ian Lloyd: One of the things that the country may or may not have come to learn during


the last election is that we are finding ourselves as a country, and possibly as a civilisation, in a zero growth situation. The real income of our community and of our civilisation is probably stabilising itself at current levels. There is little prospect of an increase in real terms. It seems that the Committee, if it is doing nothing else, is saying to the country "We are prepared now to institutionalise inflation. We are admitting defeat. We are saying that never again shall we be able to offer the prospect of a stable pound and a stable currency ". I find that a horrifying admission and realisation.
Is the only possible alternative that Governments now have before them to institutionalise inflation to the point when my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) seriously suggests that we might have to review pensions and income of other forms on a monthly basis? If that can be done on a monthly basis, it could quite seriously be decided that it should be done on a weekly or daily basis. Are we to have all the main computers of the Treasury churning out all the statistics which would be needed to give a daily point value to the currency? If we admit that we can go from a year to half a year and from half a year to a month, why should not we go from a month to a week and from a week to a day?
The first question which we should ask ourselves is whether there is a practical alternative. Must we now as an administration, and as the engine of management of this country, seriously accept that inflation is so totally out of control that the only way in which we can pretend to guarantee a real income for the retired section of the community—to use the word "guarantee" would be a grave exaggeration—is by the extraordinary process of national self-bluff that we can go on and on dealing with our currency in the present way?
I see that the Secretary of State is looking at me somewhat indulgently. Perhaps she has practical alternatives. She may well be looking at me and thinking that it is time that I suggested some practical alternatives. I accept that. There is only one serious objective which any serious Government of a serious civilisation could put forward, and that is to restore the stability of our country. If as a Par-

liament we now say that we shall institutionalise inflation not only in this sector, whilst dealing with possibly 8 million people who represent 15 per cent. of the population, but on a broad front wherever Parliament has a definite responsibility for fixed incomes and for the real income content of those incomes, then it seems that Parliament is making a most extraordinary confession of total defeat.
We cannot even discuss the amendment without facing seriously the reality of what we are doing. There are other ways of proceeding which involve the acceptance on the economic front of a variety of economic self-disciplines which, as far as I have been able to judge, the nation is not prepared to accept. Unless that message does not produce a package deal that institutionalises inflation, the confession of defeat will be final and permanent.

Sir G. Howe: It falls to me to thank the Government for their willingness to accept the amendment. In so doing, I must say a word about the thoughtful contribution of my hon. Friend the Member for Havant and Waterloo (Mr. Lloyd). My hon. Friend is undoubtedly right to underline the extent to which the British people—and I hope that this is implicit in some of the things that were said by the Chancellor of the Exchequer in his Budget Statement—must face a world in which the achievement of growth on any steady basis is far more difficult than it has been in our political lifetime.
The impact of world economic conditions must make a substantial difference to our expectations. My hon. Friend is right to ask how far the Committee and any Government should accept the institutionalisation of inflation. I have no doubt that right hon. and hon. Members on both sides of the Committee would like more than anything else, as would the electors, to see any Government achieve a stable currency.
There appear to be factors at work in the opposite direction, even in the most well-disciplined economies around the world, which are, as it were, looking for a new Keynes to produce something in the way of a fresh solution. We are not near to finding that solution. No doubt part of the answer is to be found in an acceptance of some of the harsh realities of the difficulty of overcoming


inflation. It is worth pointing out that even the most economic purist from the Chicago school, and I have in mind Milton Friedman for one, actually argues now that if we are to obtain acceptance by a community of all that is necessary to overcome inflation—and that will not be easy—it is legitimate often to index benefits of this kind while the inflation persists.
I hope that no one on either side of the Committee thinks that the provision for a periodic review of benefits—although it is part of what we must do to deal with inflation—represents, for me anyway, an acceptance of any form of institutionalising inflation. Far from it. While inflation is with us we have to be prepared to make this kind of change in our machinery.
When I spoke about monthly reviews I was not arguing that that was the necessary or desirable pattern. I was commenting on the fact that I was told that it was done in Belgium. I was arguing the desirability of a monthly pattern of payment over the years to get away from the many hazards of storage of cash, administrative burdens and everything else involved in the weekly pattern. I referred to the monthly review only to demonstrate that other administrative systems find it easier to cope with more frequent reviews than does our own. The right hon. Lady said that a change to a more frequent review would involve an inflation of the bureaucracy. That can be presented as implicit in a change with the system we now have.
It may be possible to improve on that system and by other changes, such as tax credit changes, to produce an offset in saving elsewhere. We are grateful to the Government for their willingness to accept the amendment and hope that they will also accept the consequential Amendment No. 9.

Amendment agreed to.

Amendment made: No. 9, in Clause 5, page 5, line 4, at end insert:
' (2B) After subsection (10) of the said section 39 there shall be inserted the following subsection—
(10A) Following each review of social security benefits under this section, the Secretary of State shall lay before each House of Parliament a report of his conclusions on the matters which he is required

to consider by subsection (3)(c) above '.—[Sir G. Howe.]

Question proposed, That the clause, as amended, stand part of the Bill.

10.30 p.m.

Mr. Kenneth Clarke: I should be grateful for clarification of a matter of substance which I had hoped to raise on Amendment No. 6, standing in my name, which was not, unfortunately, selected, because, I am advised, a wider amendment to earlier legislation would have been required to reach the conclusion I wished. I am sure that the point is in order on Clause 5 as it refers to the annual review.
I ask whether the Government will now concede that the annual review should now include the application of the earnings rule to retirement pensioners. As I sought to raise the matter on Clause 4 and the Under-Secretary of State replied, I will not go into the case at length again now, but he was unable to answer me fully then and perhaps he has now been more adequately briefed.
I will not press the matter too hard because I am sure that the Government agree in principle with what I am saying. I remember how passionate in Opposition the right hon. Lady and the Minister of State were in pressing that we should include the earnings rule for retirement pensioners in the annual review. When the Under-Secretary of State tried to defend the earnings rule against my hon. Friend the Member for Kensington (Sir B. Rhys Williams) earlier, he did it so diffidently that it was clear that he shared our approach to it and had little faith in the brief from which he read extracts.
I believe that the case is now even stronger than it was last year. The earnings rule for retirement pensioners must be kept in step with earnings in the annual review because otherwise failure to consider such earnings in any one year would lead to a tightening of the rule and an effect which none of us want.
I trust that the Minister of State will answer sympathetically. The Government are quite excited about their commitment to an annual review in line with earnings, but apparently they are not sure that they should include it in statute. They have made a point of their commitment to keep pensions in line with


earnings, and I ask them to accept that the earnings rule should be included in the annual review as well.

Mr. O'Malley: First, I repeat the point made earlier when we were discussing the general question of the earnings rule. Both sides of the Committee recognise the problems of conflicting financial priorities. Secondly, without commitment, I am of course prepared to consider what the hon. Gentleman has said.

Question put and agreed to.

Clause 5, as amended, ordered to stand part of the Bill.

Clause 6

MINOR SUPPLEMENTARY PROVISIONS AND AMENDMENTS OF CERTAIN SOCIAL SECURITY ENACTMENTS.

Question proposed, That the clause, stand part of the Bill.

Sir B. Rhys Williams: I should be grateful if the Minister of State would enlighten us as to the precise effect of this clause, which, if it means what we think it means, we welcome. It appears only to give the Secretary of State powers to set aside decisions where it appears just to do so back to 1965. Does this mean that hard cases which have been left unattended up to now because the Secretary of State had no power to deal with them and which arose before 1965 will still remain hard cases which cannot be dealt with? Or will it be possible to re-open cases, which all concerned felt were unjust, where the actual events took place before 1965?

Mr. Raison: Subsection (4) refers to certain matters which would be dealt with by the Occupational Pensions Board in its discretion. Can the Minister of State tell us off the cuff what kind of matters these might be, and perhaps more specifically how the Government see the role of the board? There has been some doubt about the attitude of the Government towards the board. Anything that the hon. Gentleman could say on this subject would be helpful.

Mr. O'Malley: I think it would be more sensible if I were to answer that general question when my right hon. Friend the Secretary of State makes an

interim statement on the future of the Social Security Act 1973, and then defines the long-term position more clearly in our White Paper.
The purpose of subsection (4) is to remove a doubt about the vices of four provisions in the Occupational Pensions Schemes (Preservation of Benefit) Regulations 1973. The number of the statutory instrument is SI 1469. It gives power to make similar regulations if they are required.
I will read carefully what the hon. Member for Kensington (Sir B. Rhys Williams) said and I will write to him on the subject.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Clauses 7 and 8 ordered to stand part of the Bill.

New Clause 4

INCREASE OF DEATH GRANT

In paragraph 2 of Schedule 4 to the Insurance Act, for sub-paragraph (d) there shall be substituted:
(d) over the age of 18/30·00."—[Mr. Boscawen.l

Brought up, and read the First time.

Mr. Boscawen: I beg to move, That the clause be read a Second time.
This is a very modest but a just and humane clause. Unfortunately, it is a much more modest clause than I would have wished to introduce, but the Chair has ruled new Clause 2 out of order, although it covers all of the points which I wish to raise. This clause covers a very small group of very worthy citizens —those who in 1948 were within 10 years of retirement. There is another smaller group—perhaps even more worthy—who were too old for the scheme in 1948 because they were at that time over retirement age. Unfortunately, that small group who are not eligible for any death grant cannot be included in this Bill. I wish that group could be included.
This is the third time that I have sought to introduce such a measure to successive Governments. I have to limit this clause to those who were within 10 years of retirement in 1948. Under successive Acts


they have been entitled only to a limited death grant of £15. Everyone else is entitled to a death grant of £30. Of course, I do not suggest that £30 is anywhere near adequate. I think it is totally inadequate. I understand from those who have advised me that it would require three times that sum to provide the most simple funeral, which would cost something like £80 or £90. By "simple" I mean a funeral with no flowers, no entry in the mourning book and no other trappings that most people regard as necessary for a decent funeral.
However, it is not my intention to ask the House to raise the total death grant because that would cost a large sum of money and I do not think there would be any chance of having such a request accepted on this occasion. I particularly ask that this deserving group, some of whom are well over 80 and others over 90, who were within 10 years of retirement in 1948, should be entitled to the death grant.
I was shocked by some comments in letters that I had after seeking to introduce a similar amendment last year. The people who really know about the very poor when they die are the town clerks and district council clerks who often have to administer the funerals of such people. A number of them have written and explained to me what it is like. I was shocked that such things should still continue in 1973 and 1974.
Therefore, I ask the Committee to consider how much longer we can tolerate the low level of death grant for these people, particularly for the group who receive a reduced rate of grant through no fault of their own, but merely because they were so old when the 1948 Act was introduced. I wish that something could be done for those who are entitled to no grant at all. However, because of the way that the Bill is drafted by the Government, who did not seek to increase any of the grants, maternity or otherwise, I cannot include them.
I hope that the Minister, who spoke so eloquently and fairly on this subject last year in Committee, will support the new clause. I realise, as do many hon. Members on both sides of the Committee, that this blot or stain on our social

security system should have been erased years ago. Successive Governments have stood by the contributory principle: that as these people had not contributed the full amount they were not entitled to the full benefit. The contributory principle has been breached on a number of occasions—in particular, when we introduced the pension for the over-80s. I suggest that it ought to be breached again regarding the death grant.
This is a modest, humane clause. There is no political mileage in it and no votes. It is something that we all wish to see carried out. I therefore ask the Committee to give its support to the new clause.

Mrs. Kellett-Bowman: I was shocked that throughout almost the whole of the beginning of the speech made by my hon. Friend the Member for Wells (Mr. Boscawen) the Chancellor of the Exchequer, who has left his place, was laughing and talking to his neighbour and not taking the matter as seriously as he should have done—[HoN. MEMBERS: "Not true."]—I doubt whether younger hon. Members fully appreciate the importance that a highly independent and proud elderly person attaches to giving his or her loved partner a decent burial.
I was born and brought up in the North-West at the time when the first Socialist Chancellor, Philip Snowden, brought in the means test. I know how much importance people in my part of the country attach to being able to put something on one side for a decent funeral for themselves without being a burden to those they leave behind.
As my hon. Friend the Member for Wells said, this is but a modest step in that direction, but it is a step which the Committee should take tonight. It will go only perhaps one third of the way towards making good a deficiency which arises because of the high cost of funerals. The elderly people who will benefit from the provision were paying their stamp when money was very hard to come by. I ask the Committee to treat the clause sympathetically and, if necessary, to come with us into the Lobby tonight.

10.45 p.m.

Mr. McCrindle: On Second Reading I spoke about the death grant and I


reminded the Minister in no spirit of malice how he and I had shared the same aspirations under the last Government. I listened to his reply with understanding and sympathy, but surely the Government can tonight show an earnest of their good intentions by accepting the clause. It touches at the heart of the people who are worst done by under the death grant arrangements.
The Government are introducing, to their own pride and with our commendation, a major development in social security costing hundreds of millions of pounds. It seems that the additional amount which would be required to improve the death grant under the terms of the clause is very small by comparison. I hope the Minister will be able to accept the clause and begin to end the whole system of paupers' burials which are still with us and which are, to that extent, a condemnation of us all.

Mr. O'Malley: I have taken part in debates on the death grant with the hon. Members for Wells (Mr. Boscawen) and Brentwood and Ongar (Mr. McCrindle) over a number of years. I agree with them that the current levels of death grant need revising. I do not seek to score political points when I say that they needed revising under the last Government.
The grant was introduced by the Labour Government in 1946, and it was 1958 before that grant was increased from the original figure to £25. It was raised to its present level by the Labour Government in 1967. The grant is therefore high up the list of items which need careful and sympathetic consideration. I have argued that case in Opposition and I have no intention of changing my view simply because I have moved across the Floor of the House.
No Minister at one uprating can commit any future Minister to a course of action at the next uprating. The primary problems this year are that we are spending £1,250 million in a full year on a very simple uprating to implement the £10 and £16 principle. We made the Bill as simple as possible and left out proposals of all kinds to make the issue easy to deal with in this difficult period. We are spending a great deal of money.
The new clause does not, in global terms, involve a great deal of money. But my difficulty, as a Minister of State in the Department is that while only X million of pounds may be proposed here and only Y million of pounds there the overall bill can be one of hundreds of millions of pounds, not just a few million pounds. Hon. Members opposite would find themselves similarly placed if our roles were reversed.
I am not in a position—no Minister could be—to give a commitment about what will be in the next uprating which comes before the House of Commons. But it is my firm view, and I am sure the view of the Government, that death grants are an urgent priority. We should like to have the opportunity to review death grants as a whole rather than to deal with a specific, relatively small part of the matter. I do not wish to make anything of the argument of principle, although I could do. We have all previously argued about whether a particular benefit arises under contributory principles, and about whether it should or should not do so, but the fact remains that this is a contributory benefit as it stands at present.
I hope that hon. Members opposite who have spoken on this matter will accept that we are prepared to consider the whole question of death grants as a matter of high priority before the next uprating. I hope that they accept that it would be preferable to deal with this matter on a comprehensive basis rather than by way of this new clause which is not the new clause which the hon. Gentleman wanted to move. He would have liked to move a different new clause, but was prevented from doing so because of the Money Resolution. This new clause deals with only a fraction of the problem and if hon. Members are prepared to withdraw it we are certainly prepared to consider the whole question of death grants as a high priority for the next uprating.

Mr. Kenneth Clarke: May I remind the hon. Gentleman of the way he responded to such an agonising appeal from his predecessor in office during the Committee stage of the previous Bill relating to this matter a year ago, when people were already dying at a considerable rate, as unfortunately they are. The hon. Gentleman gave a stony reaction to such a


commitment and his response was passionate eloquence in favour of this change. I was the unhappy Government Whip, trying to keep the Opposition together. Is he now to give that miserable Whip the task of turning out his party—

Mr. Ernest G. Perry: Take that back.

Mr. Clarke: I meant that only in anticipation of the hon. Gentleman's state of mind and was not referring to his qualities, but he will have the job of turning out Members opposite to vote for the case which the Minister has just put.

Mr. O'Malley: I was not looking for a political row on this. I have tried to treat the contributions made as very important and to meet them as far as I could. The last uprating cost £550 million in a full year. This one, in very difficult economic circumstances, will cost £1,268 million. The hon. Member for Rushcliffe (Mr. Clarke) has suggested that that is not responsible. I do not want to be unkind to him on an issue on which we are all sensitive but it is difficult to understand how he thinks an uprating of this size is not responsible, while at the same time he wants to make exceptions.
In ideal circumstances, like everyone else, I should like to make exceptions. But if one added all these small matters together, one could easily spend several hundreds of millions extra.

Mr. McCrindle: I understand the position that the Minister is taking, which is identical to the one for which he criticised his predecessor last year, but does he not realise that the debates are close to their end? He cannot be asked to accept many more amendments. So would he not show an earnest of good intentions of a general review of the death grant, which we wholly accept, by moving slightly forward to the very edge

of this area and accepting the new clause, which is modest by any standards?

Mr. O'Malley: There are some improvements which I, like everyone else, would like to see. There is a real claim in the matter of disregards alone. We should like improvements in all these important and emotive areas. I think that I have conceded more this evening on this point than any Minister in recent years. I want to see that kind of improvement.
If hon. Members will accept my goodwill and good intentions, it may be possible to achieve far more improvement in this area. If hon. Members would be prepared to leave it at that now, I will take their points on board in the way I have mentioned. I understand and sympathise with them.

Mr. Boscawen: Of course I accept the Minister's sincerity. He feels deeply on this important matter, as we all do. I also understand his embarrassment, which my hon. Friend also suffered when he rejected a similar amendment for the same reasons. But when we are spending a vast sum like £1,260 million, the public will ask why we could not afford to add this small amount to help this needy group That is very difficult to argue against.
I accept that the Minister will have a full review, which is long overdue, and that it may be necessary not only to extend it to those who get no grant at all but also to uprate the grant to something like the true cost. But I cannot accept his refusal to introduce this small measure, and I for one will support it if it goes to the vote.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 36, Noes 253.

Division No. 13.
AYES
[11.0 p.m.


Aitken, Jonathan
Knox, David
Ross, Stephen (Isle of Wight)


Ancram, M.
Lawrence, Ivan
Sainsbury, Tim


Baker, Kenneth
Lester, John (Beeston)
Shaw, Giles (Pudsey)


Chalker, Mrs. Lynda
McCrindle, R. A.
Sims, Roger


Cockcroft, John
Marshall, Michael (Arundel)
Steen, Anthony (L'pool, Wavertree)


d'Avigdor-Goldsmid,Maj.-Gen.James
Mayhew,Patrick(RoyalT'bridgeWells)
Warren, Kenneth


Durant, Tony
Moate, Roger
Winstanley, Dr. Michael


Dykes, Hugh
Morrison, Charles (Devizes)
Winterton, Nicholas


Fletcher, Alexander (Edinburgh, N.)
Nicholls, Sir Harmar
Worsley, Sir Marcus


Hampson, Dr. Keith
Page, Rt. Hn. Graham (Crosby)



Howells, Geraint (Cardigan)
Pattie, Geoffrey
TELLERS FOR THE AYES:


Hurd, Douglas
Renton, R. T. (Mid-Sussex)
Mr. Kenneth Clarke and


Kellett-Bowman, Mrs. Elaine
Rhys Williams, Sir Brandon
Mr. Robert Boscawen.


Knight, Mrs. Jill






NOES


Allaun, Frank
Garrett, W. E. (Wallsend)
Mulley, Rt. Hn. Frederick


Archer, Peter (Warley, West)
George, Bruce
Murray, Ronald King


Armstrong, Ernest
Golding, John
Newens, Stanley (Harlow)


Ashley, Jack
Gourlay, Harry
Oakes, Gordon


Ashton, Joe
Graham, Ted
Ogden, Eric


Atkins, Ronald (Preston, N.)
Grant, George (Morpeth)
O'Malley, Brian


Atkinson, Norman
Grant, John (Islington, C.)
Orbach, Maurice


Bagier, Gordon A. T.
Griffiths, Eddie (Sheffield, Brightside)
Ovenden, John


Barnett, Guy (Greenwich)
Hamilton, James (Bothwell)
Owen, Dr. David


Barnett, Joel (Heywood &amp; Royton)
Hamling, William
Padley, Walter


Bates, Alf
Hardy, Peter
Palmer, Arthur


Baxter, William
Harper, Joseph
Park, George (Coventry, N.E.)


Benn, Rt. Hn. Anthony Wedgwood
Harrison, Walter (Wakefield)
Parker, John (Dagenham)


Bidwell, Sydney
Hart, Rt. Hn. Judith
Pavitt, Laurie


Bishop, E. S.
Hattersley, Roy
Pendry, Tom


Boardman, H. (Leigh)
Hatton, Frank
Perry, Ernest G.


Booth, Albert
Healey, Rt. Hn. Denis
Phipps. Dr. Colin


Boothroyd, Miss Betty
Heffer, Eric S.
Prentice, Rt. Hn. Reg


Bottomley, Rt. He. Arthur
Hooley, Frank
Prescott, John


Boyden, James (Bishop Auckland)
Horam, John
Price, Christopher (Lewisham, W.)


Bradley, Tom
Howell, Denis (B'ham, Small Heath)
Price, William (Rugby)


Brown,Bob(Newcastle upon Tyne,W.)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Radice, Giles


Brown, Ronald (H'kney,S.&amp; Sh'ditch)
Hughes, Mark (Durham)
Rees, Rt. Hn. Merlyn (Leeds, S.)


Buchan, Norman
Hughes, Robert (Aberdeen, North)
Reid, George


Buchanan,Richard (G' gow,Springbrn)
Hunter, Adam
Rhodes, Geoffrey


Butler,Mrs.Joyce (H'gey,WoodGreen)
Irving, Rt. Hn. Sydney (Dartford)
Richardson, Miss Jo


Callaghan,Rt.Hn.James(Cardiff,S.E.)
Janner, Greville
Roberts, Albert (Normanton)


Callaghan, Jim (M'dd'ton a Pr'wicn)
Jay, Rt. Hn. Douglas
Roberts, Gwilym (Cannock)


Campbell, Ian
Jenkins, Hugh (W'worth, Putney)
Robertson, John (Paisley)


Cant, R. B.
Jenkins, Rt. Hn. Roy (B'ham, St'fd)
Roderick, Caerwyn E.


Carmichael, Neil
John, Brynmor
Rodgers, George (Chorley)


Carter, Ray
Johnson, James (K'ston uponHull,W.)
Rodgers,William (Teesside,St'ckton)


Carter-Jones, Lewis
Johnson, Walter (Derby, S.)
Rooker, J. W.


Castle, Rt. Hn. Barbara
Jones, Barry (Flint, E.)
Rose, Paul B.


Cocks, Michael
Jones, Dan (Burnley)
Ross, Rt. Hn. William (Kilmarnock)


Cohen, Stanley
Jones, Gwynoro (Carmarthen)
Rowlands, Edward


Coleman, Donald
Jones, Alec (Rhondda)
Sandelson, Neville


Colquhoun, Mrs. M. N.
Judd, Frank
Sedgemore, Bryan


Concannon, J. D.
Kaufman, Gerald
Selby, Harry


Conlan, Bernard
Kerr, Russell
Shaw, Arnold (Redbridge, Ilford, S.)


Cook, Robert F. (Edinburgh, G.)
Kilroy-Silk, Robert
Sheldon, Robert (Ashton-under-Lyne)


Craigen, J. M. (G'gow, Maryhill)
Kinnock, Neil
Shore, Rt. Hn. Peter(S'pney&amp;P'plar)


Crawshaw, Richard
Lamborn, Harry
Short, Rt. Hn. E. (N'ctle-u-Tyne)


Crosland, Rt. He. Anthony
Lamond, James
Silkin, Rt. Hn. John (L'sham,D'ford)


Cryer, G. R.
Latham, Arthur (CityofW'minsterP'ton)
Siikin, Hn. S. C. (S'hwark, Dulwich)


Cunningham,G.(Islington,S&amp;F'sb'ry)
Leadbitter, Ted
Silverman, Julius


Cunningham, Dr. John A. (Whiteh'v'n)
Lee, John
Skinner, Dennis


Davidson, Arthur
Lestor, Miss Joan (Eton &amp; Slough)
Smith, John (Lanarkshire, N.)


Davies, Bryan (Enfield, N.)
Lever, Rt. Ha. Harold
Snape, Peter


Davies, Denzil (Llanelli)
Lewis, Ron (Carlisle)
Stewart, Rt. Hn. M. (H'sth,Fulh'm)


Davies, Ifor (Gower)
Lomas, Kenneth
Stoddart, David (Swindon)


Davis, Clinton, (Hackney, C.)
Loughlin, Charles.
Stonehouse, Rt. Hn. John


Deakins Eric
Loyden, Eddie
Stott, Roger


Dean, Joseph (Leeds, W.)
Lyon, Alexander W. (York)
Strang, Gavin


de Freitas, Rt. Hn. Sir Geoffrey
Mabon, Dr. J. Dickson
Strauss, Rt. Hn. G. R.


Delargy, Hugh
McCartney, Hugh
Summerskill, Hn. Dr. Shirley


Dell, Rt. Hn. Edmund
MacFarquhar, Roderick
Swain, Thomas


Douglas-Mann, Bruce
McGuire, Michael
Thomas, D. E. (Merloneth)


Duffy, A. E. P.
Mackenzie, Gregor
Thorne, Stan (Preston, S.)


Dunnett, Jack
MacLennan, Robert
Tierney, Sydney


Dunwoody, Mrs. Gwyneth
McMillan Torn (Glasgow, C.)
Tinn, James


Eadie, Alex
McNamara, Kevin
Tomlinson, J. E.


Edelman, Maurice
Madden, M. 0. F.
Torney, Tom


Edge, Geoff
Magee, Bryan
Tuck, Raphael


Ellis, John (Brigg &amp; Scunthorpe)
Mahon, Simon
Urwin, T. W.


Ellis, Tom (Wrexham)
Mallalieu, J. P. W.
Varley, Rt. Hn. Eric G.


English, Michael
Marks, Kenneth
Wainwright, Edwin (Dearne Valley)


Evans. Fred (Caerphilly)
Marquand, David
Walker, Harold (Doncaster)


Evans, loan (Aberdare)
Marshall, Dr. Edmund (Goole)
Watkins, David


Evans, John (Newton)
Mason, Rt. Hn. Roy
Weitzman, David


Ewing, Harry (St'ling,F'kirk&amp;G'm'th)
Meacher, Michael
Wellbeloved, James


Fernyhoug[...], Rt. Hn. E.
Mellish, Rt. Hn. Robert
White, James


Fitch, Alan (Wigan)
Mendelson, John
Whitehead, Phillip


Flannery, Martin
Mikardo, fan
Whitlock, William


Fletcher, Ted (Darlington)
Millan, Bruce
Wigley, Dafydd (Caernarvon)


Foot, Michael, Rt. Hn.
Miller, Dr. M. S. (E. Kilbride)
Willey, Rt. Hn. Frederick


Ford, Ben
Molloy, William
Williams, Alan (Swansea, W.)


Forrester, John
Moonman, Eric
Williams, Alan Lee (Hvrng, Hchurch)


Fowler, Norman (Sutton Coldfield)
Morris, Alfred (Wythenshawe)
Williams,Rt.Hn. Shirley(H'f'd&amp;St'ge)


Fraser, John (Lambeth, Norwood)
Morris, Charles R. (Openshaw)
Williams, W. T. (Warrington)


Freeson, Reginald
Morris, Rt. Hn. John (Aberavon)
Wilson, Alexander (Hamilton)


Galpern, Sir Myer
Moyle, Roland
Wilson, Rt. Hn. Harold (Huyton)


Garrett, John (Norwich, S.)









Wilson, William (conventry, S.E.)
Woof, Robert
TELLERS FOR THE NOES:


Wise, Mrs. Audrey
Wrigglesworth, Ian
Mr. Thomas Cox and


Woodall, Alec
Young, David (Bolton, E.)
Mr. J. D. Dormand.

Question accordingly negatived.

Orders of the Day — Schedule 1

PROVISIONS TO BE SUBSTITUTED IN SCHEDULE 3 TO THE NATIONAL INSURANCE ACT 1965

Mr. Kenneth Clarke: I beg to move Amendment No. 10, in page 10, line 2, column 2, leave out '£0·25' and insert:
'£0·25 (in respect of retirement pensions to which paragraph 11 of this table refers) £0·50 (in all other cases)'.
This is an amendment which has some similarity to the previous amendment in that the Government find difficulty in contemplating any amendment that involves any increase in expenditure. It is therefore possible to deploy only amendments which would involve an absolutely trivial amount of expenditure. Since the Minister attacked me in the last debate for what he called inconsistency between what I said then and what I said on Second Reading and, indeed, what I am about to say, perhaps I should make my position clear.
My understanding of the Government's position is that the huge expenditure for which the Minister rightly claims credit was entered into before the election as an election commitment. Nice round figures were chosen. They were chosen without any consideration of the cost which would be involved and the effect that that cost would have on other priorities, particularly a national insurance scheme.
The figures for retirement pensions which were taken up by the Labour Party were first put forward a long time before the election by Mr. Jack Jones of the Transport and General Workers' Union. Had the election come even earlier, so that the actual value of that commitment had not been eroded so much by inflation, it is possible that the Labour Party would not have been able to put forward the figures that it was prepared to bandy about for so long.
Attempts to plug gaps to deal with minor matters in the national insurance scheme have had to be cast aside, the Labour Party having saddled itself with

its pension commitment. However welcome that commitment is to the beneficiaries, and however much it represents a real shift in resources, such a commitment has left the Government with no room in which to maneouvre. The Minister has not been in a position to give one brass farthing to the smallest claim which has been put forward. In the debate on the last amendment we were not doubting the Minister's good faith but bringing home to him his political position.
11.15 p.m.
The Minister was so loaded up with the commitment which the Bill represents that he had to speak and vote against death grants for the over 80's because there was no room for such a trivial amount of expenditure, even though this was a proposition which he found it impossible to argue against as an urgent priority for people who are dying while they wait for this change to be made. This amendment refers to the age addition for retirement pensioners. How much would it cost to double the age addition for the comparatively small number of people over the age of 80? Will the Minister be able to accede to this request? I anticipate that he will not be able to do so. This illustrates how this particular orange has not a pip left to be squeezed out of it.
If the hon. Gentleman is not able to satisfy me and the expenditure proves to be impossible, given the difficulties he has put himself in, will he say a brief word about the Government's approach to the age addition and this choice of priorities in retirement pensions? The age addition was brought in a few years ago and in my opinion is a desirable choice of priorities, made by the previous Government. The Tory Government meant it to be a foundation on which to build when resources allowed.
When they first retire nowadays, pensioners are increasingly in good health. Those just over 65 will be allowed to carry on working if the earnings rule is eased. There will be some modest savings for them if the Government allow them to supplement the national insurance pension. It is when they reach the


age of 80 that more pressing financial difficulties arise. Such people are no longer able to remain in remunerative employment. Those who have been supplementing their pension by their savings find that they have exhausted those savings after 15 years in retirement. There are extremely sad cases of people living to a very great age and getting into more and more straitened circumstances in the last few years.
I should like the Minister to say that he accepts that this was a valid choice of priorities and that when he next brings forward a National Insurance Bill—after a calmer and more detached period of thought—he will not allow the fact that the age addition is frozen in this Bill to mean that the Government are going back on their choice of priorities. In view of the small number of cases I hope he will say that this group of over 80s can look forward to some age addition in the not-too-distant future.

Mr. Raison: My hon. Friend the Member for Rushcliffe (Mr. Clarke) has presented a persuasive and effective argument. I, too, look forward to hearing what the Minister has to say on this question of the age addition. It is a common practice of the Labour Party and of this Government to scoff at or disapprove of the discriminatory elements in our social policy. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) showed what a discriminatory or selective social policy could mean when he introduced this distinction between the genuinely old and those who merely happen to be over 60 or 65.
He brought in the notion that if a person was over 80 he had personal needs not applying to the general run of pensioners of 60 or 65. The age addition was a thoroughly good idea. If the Government had not been so profligate in their approach to such matters as food subsidies and free family planning services, which will cost a certain amount of money, there would be money to spare for worthwhile exercises such as that put forward by my hon. Friend. I shall await the Minister's reply with interest.

Mr. O'Malley: Both the hon. Member for Rushcliffe (Mr. Clarke) and the hon. Member for Aylesbury (Mr. Raison) have asked me to state the Government's atti-

tude towards the age addition. The hon. Member for Aylesbury suggested that members of the Labour Party, including members of the present administration, either scoffed at or disapproved of the age addition. If the hon. Gentleman looks back at the history of the matter, he will see the reception that we gave to the scheme in 1971. We welcomed the announcement when it was made, and we think that this is one of the aspects of the national insurance system that needs careful examination at upratings.
I think that I should point out that the Conservative Government did not increase the age addition automatically at each uprating. The system was introduced in September 1971, but the original sum of 25p was not increased at the uprating of 1972 or at that of 1973. The Committee may like to know what would be needed to restore the purchasing power of the original 25p. That would require not an extra 25p as is suggested in the amendment, but only another 6p if that was all that one wanted to do.
I have said that the Government will consider the age addition, together with other aspects, at future upratings, and there are two other things that I should tell the hon. Member for Rushcliffe. In the second part of his speech the hon. Gentleman put his proposition in a reasonable way, having made his party points at the beginning. I do not object to that; I do it myself, and that is what the House of Commons is about. This would be a dull place if that were not so.
It is not only a question of the global amount of £1,250 million that is being provided by the Bill. If we are to be able to introduce the uprating on 22nd July, features such as disregards have to be left out for that reason alone, but there is another reason that the Committee must consider.
The death grant that we discussed a moment ago is, I find, an emotive issue, and it is a matter on which I have strong feelings. The acceptance of that proposal would have cost £2 million in a full year, while the acceptance of this amendment would cost £15 million in that period. The difficulty is that if one begins to add on £2 million, £15 million, £3 million and £5 million, one ends up with a substantial extra bill.

Sir Harmar Nicholls: It is no good argument for not doing any of these things to say that added together they would account for a lot of money. The hon. Gentleman should take one or two of the proposals that ought to be acceded to and accept them.

Mr. O'Malley: The hon. Gentleman has missed the point.

Sir H. Nicholls: I am sorry.

Mr. O'Malley: If the hon. Gentleman takes the matter on board, I think he will agree that we have dealt with the most important aspect of all. We have uprated long-term benefits by 29 per cent. That is the one that pensioners and long-term beneficiaries will value.
We do not disapprove of the age addition—rather the reverse. We accept it as a valuable part of the national insurance system, and it will be considered along with other aspects of the scheme at future upratings.
Next—this is a very important point—it would be impossible to introduce the uprating on 22nd July if we were to incorporate any increased benefits involving additional calculations in all individual cases. Therefore, I cannot accept the amendment.

Mr. Clarke: I am grateful to the Minister for the way in which he replied to the amendment. I am impressed by the way in which, at this time of night, problems of matching resources alongside desperately competing demands on Government can be so eloquently expressed by the Minister of State. This is becoming a more urgent matter. However, in view of the way in which the hon. Gentleman so fairly dealt with the case and accepted the obligation to deal with the age addition, and in view of the further point he made about the impossibility of applying the uprating on 22nd July, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That this be the First Schedule to the Bill.

Sir B. Rhys Williams: I took the precaution of advising the Chair that I would wish to speak in the debate on whether this should be the First Schedule to the Bill. I have a point to make which

may take a little time. It is a matter which it would have been proper to raise on Second Reading if back benchers had not been brought under pressure not to speak on Second Reading for the convenience of the Government Front Bench. I will try to confine myself strictly to what is in the Schedule. I think that what I have to say is strictly in order at this point.
I have on a number of occasions drawn attention to the relationship in the national insurance system to the benefits which are given to single people and the benefits which are given to couples under various headings of entitlement. On this occasion I have examined the relationship between single persons' and married couples' benefits where the beneficiary is a pensioner. I have also looked at unemployment and sickness benefit and injury benefit; and at the supplementary benefit rates which have been brought in for pensioners to correspond with the new higher rate of pension.
There are significant anomalies which are important and which lead to conclusions as to what the Government might or should be doing. I should like to hear whether these are points which the Minister has taken note of, because they arise out of the Bill. Even though people may not be fully conscious of these anomalies, the Government at least should know what they are doing.
There is an element in the rate of benefit for a single person which is obviously not repeated in the benefit for a couple, because, if it were, the benefit for the couple would be exactly double that for the single person. However, this is not so. The Minister is looking surprised, but I think he has heard me make this point before. If it is suggested that it is not necessary to give double for two people the benefit for a single person, we must assume that the national insurance system thinks that for two people there is a certain element which does not need to be covered twice.
This is what I call the household element. Obviously heating, roof over the head, and certain other basic items of household expenditure do not need to be repeated where there is a couple. The nature of these household elements is worth examining to see what the Department's policy is. I calculate that for


pensioners the household element before the increase in allowance was £3 and it is now to be £4 a week, and the personal element was £4·75 and is now to be £6. As regards unemployed and sickness benefit, we find that less generous increases are proposed. For the unemployed or sick, the household element was £2·80 and is now £3·30—that is, an increase of 50p, whereas the increase in the case of pensioners is £1. The personal element was £4·55 and is now to be £5·30.
For injury benefit we find that the household element was much higher: it was £5·55 and is now to be £6·05. That is an increase once again of 50p, the same as for the unemployed and the sick, but only half the increase for the pensioners, while the personal element that was formerly £4·55 is now to be £5·80. The personal element for the unemployed and the sick and those benefiting from the injury scheme is to remain the same, in spite of the other increases.
11.30 p.m.
It is the household elements that are of particular interest. The new supplementary benefit rates will have a personal element of £5·95 compared with a personal element in the pension of £6. I suppose that the difference of a shilling is to mark the inferior character of those in receipt of supplementary benefit by comparison with those drawing retirement pensions. But the household element for those receiving supplementary benefit is now to be £4·45, although it is only £4 for the pensioner. Moreover, the household element for those in receipt of supplementary benefit excludes the most important items which one would expect to be included, such as rent and heating and certain other items.
One deduces from that that the Government accept, consciously or unconsciously, that the household outgoings of the pensioner family are more than are provided for by the national insurance system, but they do not provide the extra cover for the national insurance beneficiary because it is deemed that if he needs the money, he will apply for supplementary benefit. Therefore, the pensioner who does not apply for supplementary benefit, who is somehow managing on his pension, is suffering discrimination in respect of his household expenditure.
This is something of which the Committee should take serious note, because if we allow the schedule to go through unamended, as no doubt we shall at this late hour, we shall be enacting a system that is particularly adverse for pensioners who own their own houses, because the ownership of the house is what is not taken into account in the national insurance benefit calculations. If a man owns his own house he and his wife are much nearer to being able to manage than those who have to pay rent for their accommodation. It is the payment of rent that obliges a pensioner to apply for supplementary benefit because he cannot manage if he is required to meet outgoings on rent.
Many of those in retirement on limited resources will be in subsidised accommodation, because they will still be entitled to remain in council house accommodation, or they may be living with relatives, which introduces an entirely different situation that once again the national insurance system does not take into account, although I think that it should. But others will be in furnished or unfurnished tenancies, in other words, almost certainly eligible for benefit under the Housing Finance Act.
But the Department also takes no note of the benefits available to pensioners under the Housing Finance Act. There is all too little collaboration, if any, to ensure that pensioners obtain the benefits of the Housing Finance Act that are available from local authorities. I agree that those who apply for supplementary benefit automatically have their rent allowances obtained for them, and I suppose that there is virtually a 100 per cent. take-up of the Housing Finance Act provisions in that respect; but the people who seem to be missed out are those who do not apply for supplementary benefit.
This is a matter to which the Minister should give urgent consideration. There should be a special campaign to encourage pensioners to apply for their rent allowances under the Housing Finance Act. Better still, I suggest that every taxpayer and every pensioner should be encouraged to report what rent he pays, or even obliged to report it as part of his tax return, giving his conditions of tenure. In that way the housing allowance could be calculated by the Inland Revenue—


not the local authority—and paid automatically. What in effect I am recommending is that a tax credit system which takes in a household allowance should be incorporated into the social security system.
I do not want to elaborate the scheme further, partly in view of the hour, but partly because I may be verging on going out of order. I think that I have said enough to make my point, and I shall be pleased to hear what the Minister says.

Mr. O'Malley: I think that the best thing for the Minister to say at this stage of the proceedings is that I have heard the hon. Member make some of his comments on two previous occasions on the relevant schedules to uprating Bills, and that as this is the first time I have heard the hon. Gentleman's comments when it falls to me to examine the detail of what he has said and how the elements he has described operate within the range of benefits laid down in the schedule, I shall be very pleased and willing to read what he has said and consider it fully. I will not only write to him about it but will see that his observations are properly considered and put before me in the Department.

Question put and agreed to.

Schedule 1 agreed to.

Schedules 2 to 4 agreed to.

Orders of the Day — Schedule 5

COMMENCEMENT AND TRANSITIONAL PROVISIONS

Sir B. Rhys Williams: I beg to move Amendment No. 11, in page 23, line 24, after 'dates', insert:
'not later than 3rd June 1974'.
I was tempted to raise the point which I wish now to raise in an earlier debate concerning the facilities available for more frequent upratings than the Government propose, but I think it is proper for me to stick to my amendment and make my remarks at this point.
I am concerned because every time a big increase in pensions is announced we have to explain to pensioners that, although we are doing everything possible, it will be weeks before the benefit can be introduced. I am humiliated that

no Government seem to be able to tackle the administrative problem of bringing the national insurance system up to date so that we can get the benefits of living in the computer age. There may also be questions here about the necessity to keep the increase in national insurance pension back until we can bring the supplementary benefits into payment at the same time.
I should like to hear from the Minister, and the Committee is entitled to know, whether the delay until 22nd July in the payment of the national insurance benefit at the higher rate is necessary in order to give time to allow supplementary benefit to be brought into line, whether it is the other way round or whether the same amount of time is necessary to adapt the basic pension and supplementary benefit. I have the impression that where supplementary benefit is concerned there is obviously an element of case work, and, therefore, it might be that the whole system is being kept to this grinding and humiliating delay by the supplementary benefit aspect. I do not know whether that is the case.
I remember going with an all-party group of Members to Brussels a number of years ago. Brussels was probably selected by the computer company which sponsored our visit because it was the nearest and most convenient point for Members to go to spend a day and return the same day; but I believe that very much the same system could have been seen in France, Germany and other continental countries.
What we saw in Belgium, however, convinced me that if we were prepared to install modern machinery we would be able to get rid of this humiliating delay and our pensioners would be able to get the benefit of increases decided on by Parliament in a much shorter time—probably a fortnight at most. That is the system that operates in Belgium. We had assurances there from the officials managing the machines that if they were given the new rates of benefit at the end of one month they could have them in payment within about a fortnight—say, by about the middle of the following month. When we went there, they were about to introduce their third uprating of that year.
It must not be thought that the Belgian system is so simple that it is just a matter


of percentage increases. They have the same sort of historical anomalies and built-in exceptions as we have. Even if our system is more complicated and we have seven times the number of pensioners, once one has a machine which will handle this sort of problem—it is called up to do the same work each time there is an uprating—adaptations can be put into effect much more quickly.
What are we waiting for? It crosses my mind, but it is an unworthy thought on which I shall not place emphasis, that if machines of this kind were introduced hastily in government there might be redundancies and that there may therefore be pressures not to introduce them. I am most sympathetic to those made redundant by the introduction of machines, but there is a national interest here, and I believe that the Government need to look at this matter again.
If the nub of the matter is not that there is resistance to machines but that the system we use is in some way ill-adapted to the use of machines, let Ministers put their minds to adapting the system so that we can get the benefit of machinery. We should not have to go through this humiliation again and again whereby every time we raise pensions we are unable to implement the increase for weeks because so much work has to be done in the Department.
I am certain that the right hon. Lady is sincere in saying she has done everything possible to get the payments made as soon as possible. I am certain that the officials are doing their utmost. Granted their administrative methods, and granted the machinery which we employ and the system which we have to operate, I am certain they are all doing their utmost to get the benefit we want the pensioners to have to the pensioners as quickly as possible.
But there is something wrong here and we cannot go on like this. Senior civil servants are more and more wont to grumble about this country, saying that it is becoming ungovernable. I often think that when people have a grumble they should ask themselves why. I urge senior people in the Treasury, at the Elephant and Castle and in the other big Departments which have to do with the cash relationship between the individual and the State, that if they are

finding that there is increasing resentment, non-co-operation and misunderstanding of what they are doing on the part of the public they should ask themselves "Why?". They should find out whether they are really using the best possible systems, machines and administrative methods. If they are not, they should have the humility to invest in new machines at once.

Mr. Robert C. Brown: The hon. Gentleman has perhaps put the cart before the horse in dealing with the subject of supplementary benefits before that of pensions. There are 5 million benefit cases, including supplementary benefit cases, which have to be uprated individually by clerical action, and staffing resources are not available to do this sort of thing by 3rd June. The retirement and widows' pension books are produced by computer, and uprating in the week commencing 3rd June would necessitate over 4½ million additional order books being produced within a period of four weeks. This would be in addition to the production of 2 million normal books in the same period, and would not be within the capacity of the order book production machinery. Uprating earlier than 3rd June would further exacerbate the problem.
Apart from the practical impossibility of uprating from 3rd June, there is the substantial hazard that if any uprating date earlier than 22nd July were to be substituted the normal payment machinery for pensions and benefits could well break down. I do not think that the hon. Gentleman would want that.
Because the computer does not keep a detailed record of past payments of retirement and widows' pensions there is no possibility of back-dating the increased payments on the computer. All benefits are affected by a change of circumstances, and to pay arrears of the increase clerically within a reasonable time scale would be administratively impossible. The administrative costs of uprating on 3rd June cannot be sensibly estimated without major decisions having to be taken about the short cuts that would be necessary. They would clearly be very considerable.
11.45 p.m.
The hon. Gentleman referred to other countries and the fact that they could uprate, and he referred particularly to


Belgium. There are two basic factors which govern this situation. First, other countries' schemes are not so comprehensive, and in particular they do not have the equivalent of our national supplementary benefit scheme in which payments are tailored to individual needs and in which changes in the amount of other benefits have to be taken into account when the new amount payable is to be assessed. That is one of the major difficulties.
The uprating is being carried out in 17 weeks which, in itself, any fair minded Member of the Committee will agree, is a reasonable achievement. I emphasise what my right hon. Friend has said more than once in the House and elsewhere. It is made possible only by tremendous and arduous team work of the staff of the Department of Health and Social Security, to whom we in this Committee should be extremely grateful.

Sir B. Rhys Williams: The Minister must not imply that I am not grateful to the people who are doing their utmost to operate the present system. Of course I am grateful, and the pensioners will be particularly grateful, too. But Ministers must take it on themselves to look at the system.
The Minister implied that the book system which has been in use for many years in this country is the final solution and that there can be no other. There are plenty of other ways of making cash payments, particularly on a repetitive basis. The hon. Gentleman might think of coming to the rescue of the Post Office Giro and making use of that. If he has a prejudice against the Giro he might think of other methods of making cash transfers by machinery. It is not necessary to use manual methods to implement routine payments. The Department must modernise its ideas. We cannot tolerate the present situation any longer.
The Minister has not convinced me that the Department is really up to date in its cash transfer methods. I hope he will bear this debate in mind and see that something is done tomorrow morning to modernise the whole approach to this administrative problem.

Sir Geoffrey Howe: Briefly, I wish to lend my support to the approach enunciated by my hon. Friend the Member

for Kensington (Sir B. Rhys Williams). I have a strong and growing impression that if in 10, 15 or 20 years' time people look back on the massive administrative conservatism with which the national insurance scheme has been administered over the years and contemplate the paper-shuffling, book—distributing systems to which we have been wedded for so long, they will be astonished and amazed that we have adhered to this system for as long as we have.
The points made by my hon. Friend deserve to be considered very closely. I have often contemplated this matter, and I simply do not believe that it is necessary, in the kind of society in which we live, to have this massive employment of manual labour and drudgery that is woefully inefficient and expensive and does not serve the best interests of the beneficiaries in this country. I say that in no tendentious way because I am sure that this feeling is shared by hon. Members on both sides of the House. I hope the Government will pursue the point.

Amendment negatived.

Schedule agreed to.

Schedule 6 agreed to.

Bill reported, with amendments.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — CONSOLIDATION, &c., BILLS

Ordered,

That the Lords Message yesterday relating to the Committee on Consolidation, &c., Bills be now considered.

Lords Message considered accordingly.

The Committee to join within the Committee appointed by the Lords on the Joint Committee on Consolidation, &c., Bills, was nominated of Mr. Richard Crawshaw, Mr. Ian Gow, Mr. Greville Janner, Mrs. Elaine Kellett-Bowman, Mr. Ivan Lawrence, Mr. John Lee, Mr. Eddie Lyons, Mr. Patrick Mayhew, Mr. John Smith, Mr. Ivor Stanbrook, Mr. David Waddington and Mr. William Wilson.

Ordered,

That Two be the Quorum of the Committee.—[Mr. Thomas Cox.]

Message to the Lords to acquaint them with the Order necessary to be communicated to their Lordships.

Orders of the Day — ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thomas Cox.]

Orders of the Day — RURAL TRANSPORT (NORFOLK)

11.51 p.m.

Mr. Paul Hawkins: I want to draw attention to the state of rural transport in my part of England—Norfolk—and in particular to the withdrawal of some services that we used to enjoy in the county.
The problem is obviously enjoyed or suffered by many other rural areas where villages are widely spaced and there are no cross-country railway lines left. Indeed, the only communication by rail is between London and King's Lynn and London and Norwich.
There are many more motor cars per 1,000 population in country areas because most people need cars to get to work. Many people who have to travel long distances to work—this includes farm workers—feel that they ought to have some reimbursement or tax allowance for their motor cars. This matter is not particularly within my remit tonight, but it is one about which people are increasingly concerned. The cost of transport in rural areas measured against the wages earned is a major factor in driving people from country districts. People must have cars to get to their work, and this leaves the elderly, the women, the young, the newly retired and others entirely without transport during the day.
Matters are made much worse by the withdrawal of many bus services. The furthest westernmost village in my constituency is Welney, near Wisbech. Welney is well known because one of Peter Scott's wildfowl preserves is on Welney Washes. That village is often split into two by the fact that the Washes are flooded and the road between one half of the village and the other is also shut for several weeks at a time. Bus services have also been withdrawn from other villages.
I appreciate the bus company's troubles. I have had many communications from

the bus company, which has had to alter its services because it does not get enough passengers to make them profitable.
The most isolated villages are now entirely without any form of public transport. People need transport to get to the shops, to go to the dentist, the doctor, the solicitor, the cinema, and the youth club in the evening. They need transport to get to the welfare offices, employment offices, hospitals, and so on. Where a bus service does operate, it generally runs on a Saturday. That is understandable because in the country a large amount of shopping is done on Saturdays and it is the usual market day. Nevertheless Mr. Speaker, as you will know, on Saturdays the solicitors' offices are closed, as are the welfare offices and the employment offices. Dentists and doctors often do not hold surgeries then.
So on the only day of the week that many people can travel by bus from their village to the local market towns many of these vital services, including of course the banks, are closed. That has grown into a major problem for our villages.
It is a matter which has roused more and more feeling in my constituency. A large number of retired people who are not by any means wealthy have moved from North London, Essex and Southend into my constituency. They can perhaps afford to buy a house in Norfolk when they could not afford to do so in London. These people live perhaps on the old-age pension supplemented by, say, a police or gas board pension. All their lives they have lived close to good bus, rail and underground services and they have never run a car. On reaching retirement they cannot afford to run a car, and they are therefore dependent on the bus and other forms of public transport.
Local authorities may pay subsidies towards the bus service and I know that my new local authorities are considering this. The burden of rates this year, however, is heavier for rural areas than for anywhere else. The rates were already high and to grant subsidies to the bus companies to keep even the limited services running will cost two or three times as much this year as last. That is without taking account of increasing services to the villages.
I had hoped that my hon. and gallant Friend the Member for Eye (Sir H.


Harrison) would be present tonight because he has inaugurated a mail bus service in his area. I understand that a similar service has been, or was to have been, inaugurated in Wales. But this mail bus service can have only a limited effect on the people who want to travel. We want minibuses and other vehicles which can operate at times suitable to groups of people, such as women's institues, young farmers' clubs—although members of those clubs would probably have their own cars—and many other groups who want to go out together for shopping, bingo, whist drives, or to the cinema or theatre. Many local groups of people would be enabled to get out of their villages to the local town if a small vehicle were provided. The mail bus would be of some help, but it would be limited.
The main help for the rural communities is contained in Clauses 18 to 21 of the Road Traffic Bill which was introduced into this House from the House of Lords on, I believe, 15th January this year. Clauses 18 to 21 provided for a relaxation of the bus licensing system. At present anybody who wants to start a bus service in which he will ply for hire has to go to the licensing authority, and as a general rule he is opposed either by rail operators or existing bus companies.
The Bill proposed that cars with eight seats or less and privately operated minibuses be excluded from the licensing system. In such circumstances an enterprising man with perhaps a part-time job and who may have a minibus which he uses for business during the day could, in the evenings take parties out and charge for the service. He would be able to take people out at times most convenient to them and bring them back home when the bingo, whist drive, theatre or cinema was over. He could perhaps also operate a similar scheme during the day.
Other minibuses run by professional bus companies would be exempted from the licensing system if not used on existing bus routes to pick up and put down passengers. Such a service would be a great boon for rural areas. I am sure there would be many enterprising people who would use their cars or minibuses to run such services which would enable people to get away from their villages at times most convenient to them.
I urge the Minister to ask the Government to reintroduce this part of the Bill immediately, if they do not intend to bring back the whole of the Bill. I hope that Clauses 18 to 21 of the Bill, with suitable amendments as the Government may think fit, could be introduced quickly as a small Bill. This would bring relief to rural areas, particularly in my constituency where many bus services have been withdrawn in the past few months.

12.4 a.m.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes): The House is indebted to the hon. Member for Norfolk, South-West (Mr. Hawkins) for bringing to our attention the problems of his constituents, who now find that, because of the alteration in the bus passenger services, they are deprived of transport from various points.
The provision of an adequate network of public transport services in a predominantly rural area is not confined to South-West Norfolk, but is only too familiar up and down the country.
Bus operators in urban and rural areas alike have found themselves squeezed by falling levels of demand and the pressure of rising costs, in a period of increasing competition from the private car. The figures for the industry as a whole are dramatic and eloquent. In 1950 there were some 16,000 million passenger journeys. By 1970 this was down to about 9,000 million. Over the same period there was an increase in the number of cars on the road from about 2 million to over 11 million. That means that passenger journeys were down by nearly half in 20 years; the number of cars on the road was up fivefold.
Successive Governments from the mid-1960s have made increasing amounts of money available to the bus industry chiefly in the form of a rebate of fuel duty, on which my right hon. Friend the Chancellor of the Exchequer has announced that the Government are upholding the decision of the previous administration to allow full remission of the duty on fuel for stage services instead of the previous 12½p per gallon remission, and new bus grants on the capital cost of new vehicles for stage carriage use. Direct Government assistance to the bus industry from these services is running currently at over £40 million a year.
By the late 1960s it was also clear that general support of this sort to the bus industry would still not be enough to arrest the decline in rural transport which had been taking place which he so graphically described. Traditionally, rural services which could never have been very attractive commercial operations to the bus operators had been kept going by cross-subsidisation from more profitable routes. The general deterioration in the finances of the bus industry meant that this prop was rapidly crumbling. So further measures were needed to try to meet the specific transport needs of people living in small villages or isolated hamlets who did not have alternative means of transport.
Section 34 of the Transport Act 1968 made provision for the payment of rural bus grant, which enabled local authorities, at both county and district level, to give financial support to bus services running
for the benefit of persons residing in rural areas".
Where the local authority gives this support, central Government contribute half. But it is up to the local authority in the first place to assess what it regards as the needs of the area; and this is a rôle which I am sure that central Government are right to leave to the local authorities.
So far as the particular services mentioned by the hon. Member are concerned, I understand they are not grant-aided under this section, as they previously were. The fact that they are not grant-aided at present does not mean that the county or the district has refused them. It is merely because of the local government changeover on 1st April. I have no doubt that changes will be made within the county of Norfolk to restore these grants. The hon. Member may well approach either Norfolk County Council or West Norfolk District Council, and the district would then be responsible for 50 per cent. of the cost.
But when the level of demand gets very low indeed, it is questionable whether support for a conventional bus is any longer the right answer. At this level of demand, which is by its nature sporadic and often unpredictable, there may be better ways of meeting the needs of those people—and there are a great many of them about—who do not have alternative means of transport, but who nevertheless need to get about to lead a reasonable

life—shopping, visiting friends, getting to the dentist, visiting hospitals or collecting a prescription from the chemist. Here there is scope for all sorts of local initiatives, as the pilot studies carried out by the Department in 1971, one as close as West Suffolk, showed. Among those studies various considerations were given to minibuses, postal buses and even, in some circumstances, voluntary car schemes—at that stage, where no fare was paid by the passenger but where assistance was given to the car owner by the county council by way of a grant.
The hon. Gentleman raised the interesting point of the Road Traffic Bill which was before the House at the time of the Dissolution. I hope that the hon. Gentleman will forgive me for pointing out that under the rules for an Adjournment debate I am not allowed to forecast future legislation. I shall certainly not break that rule. However, on this point my right hon. Friend is still considering the previous administration's Road Traffic Bill and undertaking consultations on it. Consultations are necessary with both sides of the passenger transport industry, the taxi industry, the bus industry, and so on, both from the point of view of the unions and the owners of taxis, because there can be abuses of such a system if there is no licensing. This must all be agreed if it is going to work fairly and properly. Consultations are taking place at present on this point.
I turn now to the specific situation described by the hon. Gentleman in Norfolk. The Norfolk County Council has been closely involved in the question of support for rural bus services. In the past year it has been providing assistance to at least 16 bus services in the county which would otherwise have been withdrawn.
Meanwhile, I understand that the biggest local bus operator, Eastern Counties Omnibus Company Limited, the local subsidiary of the National Bus Company, has been reviewing the whole network of services it operates in the area, on the basis of an extensive market research operation, to see whether it was possible to provide services which more closely match the present-day needs of the population. It looked at the routes which it had served in the past, the scope for rescheduling, and the main


patterns of journeys which the people in the area were actually now making. This led the company to put forward proposals for a complete restructuring of services, which I understand was the subject of full prior consultation with the county and district councils concerned. The proper procedures were followed by the Eastern Counties Omnibus Company.
I am also told that the changes were the subject of a substantial publicity campaign by the bus company through newspaper and even television publicity, preparation and distribution of individual village timetables, and local public meetings at which representatives of the bus company were in attendance to explain the new schedules and timetables, and the need for the restructuring of the bus timetables in Norfolk.
These are essentially matters within the responsibility of the local bus company and the National Bus Company, and I would be venturing into territory which lies outside my responsibilities if I were to enter into any more detailed discussion of the local services provided by the Eastern Counties company. But I understand that the new pattern of operations offers improved services in most areas and services which more closely reflect the pattern of journeys which most people want to make. But it has also, as the hon. Member has explained so clearly this evening, unfortunately meant a deterioration in the services to one or two villages which fitted less well into the general pattern. It is of course this feature of the situation which has led to this evening's debate.
I understand also that Eastern Counties has written to the hon. Member setting out some of the background and the details of what it has done. It is not for

me to comment on any of this except to say that I know that Eastern Counties is very willing to consider any particular problems which have arisen as a result of the revised schedules, and to have local discussions about them. To the extent that any additional services impose a financial burden on the company, it would naturally look for financial support from the local authorities—again, either county or district.
I have already stressed the crucial rôle played by local authorities in the operation of the rural bus grant. From the beginning of this month the new county authorities have a duty under Section 203 of the Local Government Act 1972
to develop policies which will promote the provision of a co-ordinated and efficient system of public passenger transport to meet the needs of the county".
They are also given specific powers to make payments to public transport operators in their areas. These provisions clearly give the new county councils a very important rôle with respect to public transport in their areas. The new system of transport supplementary grants and transport policies and programmes which will come into effect on 1st April 1975 will encourage the new county councils to reassess their transport policies and priorities and relate their assessment of the rural transport needs of their area to their total programmes.
The hon. Gentleman has done a service not only to his constituents in the villages but, by raising the matter so clearly, to all rural communities that unfortunately have to suffer from difficulties of transport to and from their villages.

Question put and agreed to.

Adjourned accordingly at sixteen minutes past Twelve o'clock.